Mediation Effect of Financial Behaviour on Financial Vulnerability among B40 Households

Amirah Shazana Magli, Mohamad Fazli Sabri, Husniyah Abdul Rahim, Mohd Amim Othman
Department of Resource Management & Consumer Studies, Faculty of Human Ecology, University Putra Malaysia

Nurul Shahnaz Ahmad Mahzan, Nurulhuda Mohd Satar
Finance and Banking Department, Faculty of Business and Accountancy, University of Malaya

Roza Hazli Zakaria
Department of Economics Faculty of Economics and Administration
University of Malaya

Hawati Janor
Finance Cluster, Centre for Sustainable and Inclusive Development,
Faculty of Economics and Management, Universiti Kebangsaan


Economic disadvantage tends to affect vulnerable groups among poor individuals, especially those working in the lower-income distribution sectors. Most B40 households will be much affected since they are vulnerable and can easily experience shock due to their low income. This research aims to assess the mediating effects of financial behaviour of 428 respondents from B40 households in Selangor districts on financial vulnerability using a nonprobability sampling (purposive stratified sample). Regression analyses were performed using SPSS Version 26.0 to determine the influential factors and the mediating effect of financial behaviour. The financial vulnerability models’ fitness was indicated in the moderate R squares of 0.290 and 0.327, where the model explains 29.0 per cent and 32.7 per cent of the variances in financial vulnerability. Financial vulnerability was explained by the models’ factors comprising of financial literacy, financial stress, and internal locus of control in the first model as well as financial behaviour in the second model. Both models without (F = 27.6444; p = .000) and with the financial behaviour variable (F = 22.565; p = .000) were valid models based on the ANOVA output. Financial stress has a positive impact on financial vulnerability whereas internal locus of control and financial literacy have a negative influence on financial vulnerability. Financial behaviour was found to have full mediation only towards the influence of internal locus of control on financial vulnerability. Those who are considered internals have to do proper financial activities to become less financially vulnerable. Hence, doing financial activities are important for these internals in managing their financial situation. In order to help households improve their financial management, responsible practices such as good use of consumer loans, restructuring of debt, financial education, and debt consultation services should be strengthened.

Keywords: B40 household, Financial behaviour, Financial technology, Financial vulnerability, Locus of control