Financial literacy and mental health

Guan, Naijie ORCID: 0000-0003-3978-5776 (2023). Financial literacy and mental health. University of Birmingham. Ph.D.

Guan2023PhD.pdf
Text - Accepted Version
Restricted to Repository staff only until 20 August 2025.
Available under License All rights reserved.
Download (3MB) | Request a copy

Abstract

Being one of the essential skills in the 21st Century, financial literacy is important in its own right and for individuals’ life-long financial well-being. Financial literacy has been associated with a series of positive financial outcomes in previous literature. However, we still know little about how financial literacy is related to individuals’ mental well-being. This thesis aims to investigate the relationships between financial literacy, financial well-being and mental well-being among adults. To realise this, three empirical studies are conducted. The first empirical study examines the relationship between financial literacy and depressive symptoms, providing the first empirical evidence of the relationship between the two concepts in a middle-income setting: China. The second empirical study provides the first longitudinal investigation on the relationship between financial literacy and depression and its underlying economic pathways, using data from a nationally representative dataset: the Health and Retirement Study (HRS) based on the U.S.. The third empirical study investigates the moderating role of financial literacy in the association between financial shocks and depression aiming to further enclose the relationship between financial literacy and mental well-being.

The findings highlight both positive and negative effects of financial literacy on mental well-being. On one hand, financial literacy is significantly associated with fewer depressive symptoms and financial literacy may positively impact individuals’ mental well-being either directly or indirectly operated through its influence on household finances such as income and wealth. On the other hand, when individuals experience financial shocks, financial literacy can magnify the negative effect of experiencing financial shocks on mental well-being. The findings suggest that investing in acquiring or sustaining financial literacy may have the potential to protect against depression and thus promote positive mental health in adults by assuring better financial well-being. However, the observed negative psychological effect of higher financial literacy suggests that the role of financial literacy on mental health is complex. Future research is needed to further understandings of the causal impact of enhancing financial literacy on mental well-being and of its complex and multifaceted underly mechanisms.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):