Financial capability and financial well-being among small business owners: Does grit moderate the association?

Piyush Hooda (), Anju Singla () and Shivani Gupta ()
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Piyush Hooda: Punjab Engineering College (Deemed to be University)
Anju Singla: Punjab Engineering College (Deemed to be University)
Shivani Gupta: Punjab Engineering College (Deemed to be University)

Journal of Financial Services Marketing, 2025, vol. 30, issue 3, No 1, 20 pages

Abstract: Abstract Financial well-being (FWB) has emerged as a critical tool for fostering resilience and sustainability among small business owners. It plays a vital role in ensuring their long-term survival and growth, as they largely depend on their personal financial capacities within a rapidly changing business landscape. Grounded in the Theory of Financial Capability, this study explores the role of financial capability (FC), a multidimensional construct with sub-dimensions financial literacy (FL) and financial inclusion (FI), in driving FWB. The study also investigates the moderating effect of Grit in strengthening this relationship. A quantitative survey of 494 MSE owners based on snowball sampling was collected from North India. Measurement and structural model were accessed using two-stage disjoint approach in PLS SEM. The results demonstrate that both FL and FI are significant dimensions of FC, with FL having a stronger influence. This finding suggests that enhancing financial education, skills, and awareness has a more substantial impact on owners' capabilities to manage financial resources effectively. Additionally, FC was found to have a significant positive effect on FWB. Furthermore, the study revealed that Grit strengthens the relationship between FC and FWB, amplifying the positive outcomes of the capabilities. This study presents a Holistic Financial Capability Development Model, designed by integrating various dimensions of FL and FI which offers a well-rounded perspective to develop and enhance entrepreneurial financial capabilities and foster FWB. Moreover, this study addresses the conceptualization of Grit within the context of finance, an area not extensively examined in the previous research.

Keywords: Financial literacy; Financial inclusion; Financial capability; Grit; Financial well-being; SEM (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1057/s41264-025-00310-1

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