Kyoung Tae (KT) Kim
Dr. Kim is an Associate Professor and Graduate Program Coordinator in the Department of Consumer Sciences at University of Alabama where he teaches in the CFP Board registered undergraduate and master programs. He received a BA in economics and a PhD in consumer sciences from The Ohio State University, and a MS in economics from Purdue University. Dr. Kim enjoys doing applied research related to household finances, investment decisions and financial planning.
Phone: 2053489167
Address: 312 Adams Hall
Phone: 2053489167
Address: 312 Adams Hall
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potential effects of financial capability on the financial fragility of US adults with various banking statuses
during the COVID-19 pandemic.
Design/methodology/approach – This study utilized the 2021 National Financial Capability Study (NFCS)
dataset to investigate the relationship between financial capability and financial fragility among consumers
with different banking statuses. The analysis controlled for employment shocks, health shocks and other
consumer characteristics. Banking statuses included fully banked, under-banked (utilizing both banking and
alternative financial services) and unbanked individuals. Logistic regression analyses were conducted on both
the entire sample and subsamples based on banking statuses.
Findings – The results showed that financial capability was negatively associated with financial fragility. The
magnitude of the potential negative effect of financial capability was the greatest among the fully banked
group, followed by the underbanked and unbanked groups. Respondents who were underbanked or unbanked
were more likely to experience financial fragility than those who were fully banked. Additionally, respondents
who were laid off or furloughed during the pandemic were more likely to experience financial fragility than
those without employment shocks. The effect size of financial capability factors was greater than that of
COVID-19 shock factors. These results suggest that higher levels of both financial capability and financial
inclusion may be effective in reducing the risk of financial fragility.
Originality/value – This study represents one of the first attempts to examine the potential effects of
financial capability on financial fragility among consumers with various banking statuses during the
COVID-19 pandemic. Furthermore, this study offers new evidence to determine whether COVID-19 shocks, as
measured by health and employment status, are associated with financial fragility. Additionally, the effect size
of financial capability factors is greater than that of COVID-19 shock factors. The results from the 2021 NFCS
dataset provide valuable insights for banking professionals and public policymakers on how to enhance
consumer financial wellbeing.
potential effects of financial capability on the financial fragility of US adults with various banking statuses
during the COVID-19 pandemic.
Design/methodology/approach – This study utilized the 2021 National Financial Capability Study (NFCS)
dataset to investigate the relationship between financial capability and financial fragility among consumers
with different banking statuses. The analysis controlled for employment shocks, health shocks and other
consumer characteristics. Banking statuses included fully banked, under-banked (utilizing both banking and
alternative financial services) and unbanked individuals. Logistic regression analyses were conducted on both
the entire sample and subsamples based on banking statuses.
Findings – The results showed that financial capability was negatively associated with financial fragility. The
magnitude of the potential negative effect of financial capability was the greatest among the fully banked
group, followed by the underbanked and unbanked groups. Respondents who were underbanked or unbanked
were more likely to experience financial fragility than those who were fully banked. Additionally, respondents
who were laid off or furloughed during the pandemic were more likely to experience financial fragility than
those without employment shocks. The effect size of financial capability factors was greater than that of
COVID-19 shock factors. These results suggest that higher levels of both financial capability and financial
inclusion may be effective in reducing the risk of financial fragility.
Originality/value – This study represents one of the first attempts to examine the potential effects of
financial capability on financial fragility among consumers with various banking statuses during the
COVID-19 pandemic. Furthermore, this study offers new evidence to determine whether COVID-19 shocks, as
measured by health and employment status, are associated with financial fragility. Additionally, the effect size
of financial capability factors is greater than that of COVID-19 shock factors. The results from the 2021 NFCS
dataset provide valuable insights for banking professionals and public policymakers on how to enhance
consumer financial wellbeing.