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Table of Contents

CHAPTER 1 ................................................................................................................................................. 1
INTRODUCTION ........................................................................................................................................ 1
1.1 Background of the study ............................................................................................................... 1
1.2 Operational definitions of items .................................................................................................... 4
1.2.1 Financial knowledge .................................................................................................................... 4
1.2.2 Financial Socialization ................................................................................................................. 4
1.2.3 Financial Behavior ....................................................................................................................... 4
1.2.4 Financial Risk Attitude ................................................................................................................ 4
1.2.6 Financial Satisfaction ................................................................................................................... 5
1.3 Problem Statement ........................................................................................................................ 5
1.4 Research Questions ....................................................................................................................... 6
1.5 Research Objectives ...................................................................................................................... 6
1.6 Purpose of Study ........................................................................................................................... 7
1.7 Significance of Study .................................................................................................................... 8
1.8 Structure of Thesis ........................................................................................................................ 8
CHAPTER 2 ............................................................................................................................................... 11
Literature Review........................................................................................................................................ 11
2.1 Review of literature..................................................................................................................... 11
2.2 Financial Satisfaction .................................................................................................................. 11
2.3 Determinants of financial satisfaction......................................................................................... 12
2.3.1 Financial Knowledge: ................................................................................................................ 12
2.3.2 Financial Socialization: .............................................................................................................. 14
“Man is by nature a social animal” Aristotle ...................................................................................... 14
2.3.3 Financial Behavior: .................................................................................................................... 15
2.3.4 Financial Risk Attitude: ............................................................................................................. 16
2.3.5 Financial solvency: .................................................................................................................... 17
2.4 Theory and Theoretical Framework ............................................................................................ 17
2.4.1 Theory of Planned Behavior (TPB) ......................................................................................... 17
2.5 Theoretical Framework ............................................................................................................... 19
Table 1 ................................................................................................................................................. 20
2.5.1 Financial Knowledge and financial satisfaction: ....................................................................... 20
2.5.2 Financial Knowledge and financial Behavior: ........................................................................... 21
2.5.3 Financial knowledge, financial behavior and Financial Satisfaction: ........................................ 22
2.5.4 Financial Knowledge and financial risk attitude:....................................................................... 23
2.5.5 Financial knowledge Financial Risk Attitude and financial satisfaction: .................................. 23
2.5.6 Financial Socialization and financial Satisfaction: .................................................................... 24
2.5.7 Financial socialization and Financial Behavior: ........................................................................ 24
2.5.8 Financial socialization financial behavior and financial Satisfaction: ....................................... 25
2.5.9 Financial socialization, financial risk attitude and financial satisfaction: .................................. 25
2.5.10 Financial Knowledge, financial solvency and financial satisfaction: ...................................... 26
2.6 Conceptual Framework ............................................................................................................... 26
2.7 Hypotheses .................................................................................................................................. 27
CHAPTER 3 ............................................................................................................................................... 29
Research Methodology ............................................................................................................................... 29
3.1 Research Design.......................................................................................................................... 29
3.1.1Unit of analysis: .......................................................................................................................... 29
3.1.2 Time horizon .............................................................................................................................. 29
3.1.3 Study setting............................................................................................................................... 29
3.2 Research methodology ................................................................................................................ 30
3.2.1 Population .................................................................................................................................. 30
3.2.2 Sample........................................................................................................................................ 30
3.2.3 Sampling technique .................................................................................................................... 30
3.2.4 Data collection tool .................................................................................................................... 30
3.3 Variable measurement................................................................................................................. 31
3.3.1 Financial knowledge .................................................................................................................. 31
3.3.2 Financial Behavior ..................................................................................................................... 31
3.3.3 Financial risk attitude ................................................................................................................. 31
3.3.4 Financial socialization................................................................................................................ 31
3.3.5 Financial satisfaction: ................................................................................................................ 32
3.3.6 Financial Solvency: .................................................................................................................... 32
3.4 Data analysis Technique ............................................................................................................. 32
CHAPTER 4 ............................................................................................................................................... 33
DATA ANALYSIS AND FINDINGS ....................................................................................................... 33
4.1 Introduction ................................................................................................................................. 33
4.2 Respondent profile ...................................................................................................................... 33
Demographics ..................................................................................................................................... 34
4.3 Data Normality Analysis............................................................................................................. 35
Mean, St.deviation, Skewness and Kurtosis ....................................................................................... 36
4.4 Reliability analysis ...................................................................................................................... 36
4.5 Correlation Analysis ................................................................................................................... 37
4.6 Confirmatory factor Analysis (CFA) .......................................................................................... 39
4.6.1 Financial Behavior: .................................................................................................................... 39
4.6.2 Financial Knowledge: ................................................................................................................ 41
4.6.3 Financial risk attitude: ................................................................................................................ 42
4.6.4 Financial Socialization: .............................................................................................................. 44
4.6.5 Financial satisfaction: ................................................................................................................ 45
4.6.6 Financial Solvency: .................................................................................................................... 47
4.7 Structural Equation Model (SQM) .............................................................................................. 48
4.7.1 Standardized regression Weights: .............................................................................................. 50
Table 12 ............................................................................................................................................... 50
4.8 Mediation Analysis ..................................................................................................................... 51
4.8.1 Bootstrapping Strategy:.............................................................................................................. 51
Standardized Direct effect ................................................................................................................... 52
Standardized Indirect effect ................................................................................................................ 53
Mediation Results and Paths ............................................................................................................... 54
4.9 Finding of hypothesis .................................................................................................................. 55
CHAPTER 5 ............................................................................................................................................... 58
Discussion and conclusion .......................................................................................................................... 58
5.1 Discussion and conclusion .......................................................................................................... 58
5.2 Implications of study................................................................................................................... 61
5.2.1 Theoretical implications ............................................................................................................. 61
5.2.2 Practical Implication: ................................................................................................................. 61
5.3 Limitation.................................................................................................................................... 62
5.4 Recommendation and future direction ........................................................................................ 62
References ...................................................................................................... Error! Bookmark not defined.
CHAPTER 1

INTRODUCTION

Happiness is outcome of satisfaction. Satisfaction which is obtained as a result of efforts carried

out by someone. Achievement crown of life is nothing but satisfaction and happiness. Series of

life aspects identify the overall satisfaction of an individual. These angles include "emphasizing

the constructive things throughout everyday life, working in a period that one appreciates,

dealing with one's accounts, having an association with cheerful individuals, beating negative

occasions and gaining from them, and being engaged with pleasurable exercises that upgrade

one's certain perspective on life and offer extraordinary fulfillment" (Kuppens, Anu, & Diener,

2008). “Positive monetary practices like financial behavior add value to financial satisfaction,

and financial satisfaction, in turn, contribute to life satisfaction” (Xiao, Tang, & Shim, 2008).

Previous studies investigations proves that the financial well-being is the predictor of overall life

satisfaction as it is one of the important predictors of an individual’s well-being (Praag and

Carbonell, 2004; Easterlin, 2006; Layard, 2005 and Mamme, Helmick and Metzen).

1.1 Background of the study

Financial satisfaction is associated with a person’s behavior, how a person manages his money to

meet financial needs. Financial satisfaction is achieved when one is capable to meet one’s short

term and long term needs.

One of the common issues of today’s world is how to manage personal finance in effective

manner because today being a debt free person is not a sign of financial well-being or financial

satisfaction. Financial satisfaction can vary from person to person, how a single person perceives

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his/her current financial situation. In every country, need of personal finance management is

increasing and becoming complex at the same time and people are becoming more concerned

about managing personal finance. Individuals are supposed to contribute to the prosperity and

efficiency of economy at national level.

Financial satisfaction has been used in many researches as a predictor of overall life wellbeing. In

the past few decades much importance has been given to financial satisfaction therefore, much

work has been done in the field of financial satisfaction and several factors affecting financial

satisfaction such as Financial satisfaction and impact of financial risk tolerance, financial

behavior, financial stress, demographics, socioeconomic factors, financial knowledge, behavior

biasness etc. but few attempts have been taken to understand the individual’s perception about

financial satisfaction and the key elements affecting financial satisfaction. According to previous

studies determinants of financial satisfactions are determined but the direction of the relationship

among them is still not clear.

According to Joo and Grable (2004) increase in financial risk tolerance level will leads to

financial satisfaction. According to Arfin (2018) financial behavior, financial knowledge and

financial risk attitude influence financial satisfaction while financial behavior is being used as

moderating variable. According to Xiao (2015) financial knowledge leads to change in financial

behavior which ultimately improves level of financial satisfaction. According to Xiao and Porto

(2017) financial literacy has direct indirect effect on financial satisfaction and overall well-being.

Financial behavior, financial risk attitude, financial socialization and financial knowledge

directly or indirectly impact financial satisfaction of an individual while making financial

decisions about investment or planning, where financial behavior act as mediator (Saurabh &

Nandan, 2018).

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Different individuals are living in different social and economic culture across the globe and are

more responsible for their financial satisfaction. Most of the countries are suffering from

unstable economic conditions and worse job market. Because of these issues individuals are

planning to secure their future in a way to achieve their permanent and temporary monetary

needs. To improve quality of life, health care and education of themselves and their belongings,

one should plan their finances for investments to fulfill immediate and future financial needs. In

developed countries future financial trends are more definite then the developing countries where

things are more uncertain and opportunities and resources are not evenly distributed among

individual. The need to explore and explain financial satisfaction and its determinants emerge

which will help the policy maker how to maximize the financial satisfaction level among the

individuals.

Pakistan is a developing country and its economic conditions are not certain. According to

ministry of finance (Pakistan, 2016-1017) “"Open use on training as a level of GDP is assessed

at 2.3 rate in FY 2016 when contrasted with 2.2 level of GDP in FY2015. Along with this, the

disease pattern is heavily dominated by malnutrition and poor dietary practices”. According to

this report Pakistan’s health care and education expenses are increasing day by day which is

causing dissatisfaction among individuals with their financial position.

Studies conducted in Pakistan investigating financial satisfaction are, financial behavioral biases

of individuals have an impact on financial satisfaction (Sadiq, Khan, Bashir, & Ejaz, 2018).

Financial behavioral biases include overconfidence, categorical tendencies, self-control bias,

budgeting tendency, the adaptive tendency and their impact on financial satisfaction. According

to Sadiq et al., (2018) demographic characteristics have impact on financial satisfaction and add

value to financial satisfaction level that can cause intention for investment in individuals.

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1.2 Operational definitions of items

This study includes six variables namely financial knowledge, financial socialization, financial

behavior, financial risk attitude, financial solvency and financial satisfaction.

1.2.1 Financial knowledge

According to Mak and Braspenning (2012) monetary education is comprehension of an

individual about money related ideas and being able to oversee individual funds and present

moment and long haul budgetary basic leadership and arranging when the financial matters

conditions are evolving".

1.2.2 Financial Socialization

As indicated by Ward (1974) money related socialization is a procedure through which youthful

people procure aptitudes, information and disposition. As per Moschis and Moore (1983) the

procedure of socialization alludes to the connection between the individual and the socializing

operator and learning process.

1.2.3 Financial Behavior

Financial behavior is characterized as the manner in which an individual deals with his cash

(Mugenda, Hira, and Fanslow, 1990). As indicated by Ozmete (2015) it is a human conduct

which is important to cash and cash the board. Money related conduct incorporates money, credit

and saving conduct.

1.2.4 Financial Risk Attitude

Financial risk attitude is a behavioral term and whenever we talk about investment and financial

decisions term financial risk attitude used and it is identified with view of the person about

specific things which is impacted by numerous things like conviction, past experience and

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mentality towards explicit circumstance and exercises (Sahi, 2013; Ricciardi, 2007 and Solvic,

1987).

1.2.5 Financial Solvency

A person is able to pay all his debts and have enough cash to meet his future financial needs.

According to De vany and Lytton (1995) the condition of solvency is same as a term used in

accounting concept “a going concern”. Personal financial solvency has also been used as a

measure of financial satisfaction.

1.2.6 Financial Satisfaction

Condition of being sound, upbeat and free from monetary stress is called financial satisfaction

(Zimmerman, 1995).

1.3 Problem Statement

Financial satisfaction is topic of significance importance. As Pakistan is a developing country

and suffering from political, social, managerial, economic and financial issues. Unstable

economy results in unemployment, health and educational issues. In Pakistan majority of people

are neither aware of personal finance management nor they are educated enough. According to

state bank of Pakistan, Pakistan’s population is more than 180 million but the penetration in

financial sector is very low. It is only 2.4% of the people who have access to credit from

financial sources. This figure shows that the majority of the population is lacking of basic

financial education that’s why people are not satisfied with their finances or they don’t have

skills of investment or management of money which ultimately results in poor financial

management that results in financial non-satisfaction. The demand to investigate the

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determinants of financial satisfaction arises. What are the common factors to attain financial

satisfaction and how much financial knowledge is important in attaining financial satisfaction.

There are few researches present on financial satisfaction, behavior biases and demographics in

Pakistan but no study found on determinants of financial satisfaction. Previous studies are based

on financial satisfaction and impact of demographics (age, gender, marital status etc). This

research will help us to investigate the relationship and immediate and aberrant effect of

financial knowledge, financial risk attitude and financial behavior on financial satisfaction of an

individual.

1.4 Research Questions

 How subjective knowledge (self-assessed financial knowledge) shapes the financial

behavior of and individual which ultimately add value to the financial satisfaction of an

individual?

 How money related socialization impacts the monetary fulfillment?

 How financial behavior and financial risk attitude upgrade or fortify the effect of

financial literacy and monetary socialization on financial satisfaction?

 Is financial solvency has impact on financial satisfaction?

1.5 Research Objectives

The fundamental objectives of the current research are given below:

 To recognize the key determinants of financial satisfaction.

 To recognize the significance of basic financial knowledge.

 Impact of basic financial literacy/financial knowledge/financial education on personal

finance management.

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 Effect of knowledge on financial well-being.

 Determine the association between subjective financial knowledge and personal finance

management behavior.

 Investigate the impact of personal finance management knowledge on risk taking attitude

of an individual while making financial decisions.

 Financial socialization and its positive or negative effect on monetary well-being.

 Effect of socialization based on personal finance management on financial behavior and

risk taking attitude.

 Impact of financial solvency on financial satisfaction.

1.6 Purpose of Study

The current research is conducted to understand the basic determinants of financial satisfaction.

This study is a minor effort to fill the gap that no study has been done on financial solvency and

financial satisfaction since 2004. Purpose of this study is to attract researchers to do more work

on financial solvency and financial satisfaction. One of the significant reasons for this research is

to determine the direction of determinants of financial satisfaction that How financial

socialization, financial behavior, financial risk attitude and financial knowledge helps in

measuring the financial satisfaction.

This research will assist us with understanding the significance of subjective financial knowledge,

an individual with financial knowledge, will be more satisfied as he can better plan, manage and

invest his money. How financial socialization can affect financial satisfaction of a salaried

person. Previous studies have been done in different socio economic environment. This study is

about one of the developing countries Pakistan where economic situations are not favorable and

people are striving to attain financial satisfaction.

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1.7 Significance of Study

Researchers are paying attention to financial satisfaction a lot because it helps in policy making

and financial planning at any level individual to family and family to country. Financial

satisfaction plays a significant job in strategy arrangement like financial approach, monetary

policy, fiscal policy and social policy and its changes that affects household and family

economics and finance (Joo and Grable, 2014; Saurabh and Nandan, 2018).

This study focuses on financial knowledge and its effects on financial satisfaction directly, with

single mediation with parallel mediation because previous studies are inconsistent in defining the

direction of effect. This is because studies are done in different socio economic and cultural

environment but very less work is done in developing countries and their lower middle class or

middle class employees.

According to Saurabh and Nandan (2018) middle class is more vulnerable and they are not good

in managing their personal finances so, this study enhances the importance of basic financial

knowledge an individual must have, especially in developing countries like Pakistan where most

of the people are unaware of basic financial knowledge. This study will enlighten the impact of

personal finance management socialization on financial well-being of an individual.

1.8 Structure of Thesis

Chapter 1: Introduction

In this section basic introduction of the study is given with operational definition of each variable

used in this study. This section quickly clarifies the foundation of the investigation with

previous studies references and identifies the gap between previous study and the current study.

basically, need of current study is defined and explained then problem statement and research

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questions are formed to further elaborate the purpose and motivation behind this study and in the

end the significance of current study is described how this study is helpful for the observed

population.

Chapter 2: Literature Review

This particular section provides an in depth view of literature, basics of the variables and their

definitions their origin and perspectives of different researcher about single variable. This

chapter provides us possible preview of all previous studies done on each variable individually or

in relation with other variables. Then each variable relationship with other is defined in the light

of theory, how single relationship is developed and what its consequences are? On the basis of

theory and concepts the theoretical framework is formulated and hypotheses are formed to test.

Chapter 3: Research Methodology

This chapter provides the basic and detailed information about the data and the conditions under

which data has been collected like sample size, population type, nature of study, unit of analysis,

time horizon, extent of researcher interference, data collection method, research setting, research

design, response rate and data analysis techniques like what tests and methods should be applied

to test the hypotheses on the observed population. Like every other chapter this chapter has its

own importance and significance as from this chapter statistical work starts and theoretical work

ends here.

Chapter 4: Data analysis and Findings

This particular section checks the each variable’s inter items reliability and validity and proves

that this questionnaire is reliable enough to be used for this study. In this chapter correlation

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among the variable is also calculated and described. The positive, negative, significant and non-

significant correlation with reference to r values is described. To test the hypotheses Amoss 22 is

being used in this study.

Chapter 5: discussion and conclusion

The last section gives the statistical results of hypotheses formed and tested. This chapter

concludes the results and discusses the results with previous studies results and provides the

reference in favor of this study and in the end provides the limitatio and future direction and give

managerial implications.

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CHAPTER 2

Literature Review

2.1 Review of literature

This section explains all the variables investigated in this study and the relationship among them.

This chapter identifies the dependent, independent and mediating variable. The dependent,

independent and mediating variables are viewed separately and their relationship is also being

discussed in the light of previous studies and theories. Correlation between the variables and the

relationship among them on the basis of theory and previous studies will be determined and

hypotheses will be formed to test.

2.2 Financial Satisfaction

Financial satisfaction is one satisfied with one’s financial situation (Zimmerman, 1995).

“Financial satisfaction is an integral component of overall life satisfaction and well-being”

(Plagnol, 2011). A sense of well-being is when a person is satisfied with his existing status like

being healthy, happy (Kammann, Farry, & Herbison, 1984) and free of liability (Zimmerman,

1995). Individual psychological well-being like how a person psychologically perceives

monetary satisfaction is related to individual overall financial well-being. In most of the previous

studies financial well-being is the common and basic ingredient to measure overall financial

well-being (Norvilitis, Szablicki, & Wilson, 2005). According to Campbell (1981) there is a

general consensus about financial satisfaction that it is a measure of overall well-being of human.

Financial well-being is outcome of financial knowledge as a financially literate person can set

financial plan. Being a debt free individual isn't plausible to be accomplished by each person yet

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to accomplishing a condition of being financially satisfied is an increasingly possible point as it

requires very much strategized monetary practices over one's life cycle. According to Norviltis,

Szablicki, and Wilson (2003) financially satisfied and well-being person is ultimately

psychological well-being. Financially satisfied person is one who is satisfied with his/her income,

able enough to meet emergencies, able to handle daily necessities, savings and debt level.

Financial satisfaction is measured by both objective and subjective factors.

Number of researchers has provided the framework for financial satisfaction which tells personal

financial satisfaction is required when we talk about consumer and family economics (porter &

Garman, 1993 ; Strumpel, 1976 and Wilhelm & Varcoe, 1991). Financial-wellbeing empirical

and conceptual framework is necessary to be developed to detect the level of personal money

based satisfaction and how it helps in promoting quality of life at individual, family and

professional level.

Much effort has been done in defining financial satisfaction but little theoretical work is being

done in development and testing of conceptual framework of financial satisfaction (Wilhelm &

Varcoe, 1991; Porter & Garman, 1993; Hayhoe, 1990 and Strumpel, 1976).

2.3 Determinants of financial satisfaction

Researchers have reported many factors which influence the financial satisfaction and help to

determine financial satisfaction.

2.3.1 Financial Knowledge:

The term financial literacy, financial knowledge and financial educations are the three same

terms with different names and used interchangeably in literature.

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“Financial literacy means basic financial knowledge and ability to use that particular financial

knowledge to attain financial satisfaction (Huhmann, 2014 and Lusardi & Mitchell, 2014). Basic

financial knowledge means basic understanding about financial products, financial concepts

which ultimately helps to manage the individual personal finances effectively (Britt, Fernatt,

Nelson, Yook, Blue, & Canale, 2012 and Hilgert, Hogarth, & Beverly, 2003). As indicated by

Friestad and Wrigt, (1994) mental customer research gives the recognized contrast among target

and emotional money related learning. "financial knowledge can be thought of as including a

person's level of trust in his/her insight, while target learning alludes just to what an individual

really knows" (Brucks, 1985). Objective knowledge refers to accurate knowledge we possess

while subjective knowledge refers to what we believe we know. Objective knowledge is the

knowledge we have while subjective knowledge is knowledge we think we have (Alba &

Hutchinson, 2000).

There are two constituents of financial knowledge, one is subjective financial knowledge and the

other one is objective financial knowledge. Objective Financial knowledge is accurate basic

financial knowledge plus newly acquired knowledge while subjective financial knowledge is

confidence level, experience and self-belief (Wang, 2009). According to Lusardi and Mitchell

(2014) financial education improves financial knowledge, motivates desired money management

behavior and enhances financial satisfaction level.

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2.3.2 Financial Socialization:

“Man is by nature a social animal” Aristotle

Financial socialization has broad conceptual definition. Socialization process affects the financial

practices. According to Lau (1998) different socialization experience help people to understand

the usage of money differently.

“Socialization is a process which begins in childhood and then continues throughout the life”

(Moschis, 1987). According to Hira, Sabri and Loibl (2012) through the process of socialization,

individuals learn skills and knowledge from the society or society agents. Who are social agents?

“Parents, peers and media are socialization agents” (Moschis & Churchill, 1987). The society has

an impact on thinking, learning, and information perception process of an individual. According

to Starobin (2013) parents have influence on the financial socialization of their children.

According to Falahati and Paim (2011) parents are the first and foremost financial socialization

practicing source for children throughout their life even from childhood, while peers are

secondary sources and then media plays its role by providing information about finance its

management its products.

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As per Dane (1994) "money related socialization is substantially more comprehensive than

figuring out how to viably work in the commercial center. It is the way toward obtaining and

creating values, mentalities, measures, standards information and conduct that add to the

budgetary legitimacy and individual prosperity". As indicated by past investigations money

related information and monetary socialization with guardians, peers and so on shapes the

conduct of an individual Most of the past examinations demonstrate that people obtain budgetary

learning and shape budgetary conduct of an individual (Moschis and Churchill, 1980).

2.3.3 Financial Behavior:

According to Mugenda, Hira and Fanslow (1990) the attitude and behavior an individual who

manages money is called financial behavior. According to Britt, Fernatt, Nelson, Yook, Blue and

Canale (2012), financial management techniques, an individual adopts for managing money is

referred as financial behavior. Monetary conduct alludes the treatment of one's pay and money

related circumstance, for example the direction of the person toward ordinary budgetary issues

(Loix, Mentens, pepermans, & Goedee, 2005). According to Xiao et al., (2008) stated that the

financial behavior is a human behavior related to financial management. Financial behavior is

also defined as how good a household or individual manages financial resources that include

savings budget planning, insurance and investment. According to some studies sometimes

financial practices such as positive financial behavior like budgeting, saving plan for long term

and short term (Robb & Woodyard, 2011 and Ali, Abd Rahman, & Bakar, 2015). Financial

behavior implies the capacity of people to deal with their funds to be effective throughout

everyday life (Falahati, Sabri, & Paim, 2012).

Financial behavior plays an important role not only for the welfare of individuals but also at

societal, national and international level. Financial behavior can be best described by observable

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financial activities by economist. Financial behavior can be explained by several factors. The

first is the individual's behavior himself. The attitude and behavior of someone in financial field

is called as financial behavior (Joo & Grable, 2004).

An individual’s financial behavior can be observed from how good he manages cash, debt,

savings and other expenses. Financial behavior relevant to how a person treats, manages, and

uses his personal financial resources. Individual who has responsible financial behavior tends

to be effective in using money, such as in making money, managing and controlling

spending, investing, and paying consuming fees on time.

2.3.4 Financial Risk Attitude:

Halim and Astuti (2015) defines financial attitude as a state of mind, opinions and judgments

about financial. If the individual has positive thoughts regarding finance, then he might have a

desire for better financial wellbeing future by investing, saving and planning the finances. If a

person's thoughts regarding money and its management are valuable and he is accounted for it,

then the attitude of the individual make the difference and he might have healthy finances which

lead to healthy life and improved the level of financial satisfaction.

“The risk tolerance of an investor implies the level of comfort while selecting an investment

option with inherent risk in it” (Ricciardi, 2007). Its mean the level of risk an individual can take

without getting worried and sleeping all night without any fear of loss (Sahi, 2013). Ability to

take risk termed as risk tolerance and capability to take financial risk is called financial risk

tolerance (Anbar & Eker, 2010; Faff, Nulino, & Chai, 2008; Grable & Lytton, 1999 and

Hallahan, Faff, & McKenzie, 2003). “Most extreme measure of vulnerability an individual can

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tolerate while making speculation" termed as financial risk tolerance (Grable J. , 2000). Financial

risk tolerance is opposite to the term of “risk aversion” (Mazzoli, Marinelli, & Palmucci, 2017).

In the past studies financial risk tolerance and financial risk attitudes has positive association

with each other (Grable, Britt, & Webb, 2008 and Sahi, 2013). According to Saurabh and

Nandan (2018) subjective financial risk tolerance of an individual is considered as the measure

of their financial risk attitude. In this study we are using financial risk attitude to measure

financial satisfaction of the individual.

2.3.5 Financial solvency:

The term solvency and insolvency is mostly used with banks organizations in short with business

entities. The condition of solvency is same as a term used in accounting concept “a going

concern”. Personal financial solvency has also been used as a measure of financial satisfaction

(De vany & Lytton, 1995).

2.4 Theory and Theoretical Framework

In recent times interest of studying financial satisfaction has been increasing among the policy

makers, educators, managers and policy makers etc. This study is about financial satisfaction and

its determinants. Basically this study revolves around behavior of different individuals during

different span of life and taking financial decisions on the base of FK, risk taking attitude and to

what extent individual is financially socialize and after all these actions finding the level of

satisfaction.

2.4.1 Theory of Planned Behavior (TPB)

Theory of planned behavior clarifies the conduct measurement and expectation to carry on

(Ajzen, 2015). Theory of planned behavior is broaden form of theory of reasoned action (TRA).

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Theory of planned behavior grants us to figure out the effect of individual deciding elements and

social condition just as non-volitional factors on goal (Han, et al., 2010). In certain, TPB

enhances the buying willingness model’s uncertainty (lobo & Jebarajakirthy, 2014).

Financial satisfaction can be explained by the theory of financial behavior. This theory is based

on the theory of planned behavior (Arifin, 2018). Theory of planned behavior conduct depicts the

human lead and desire to carry on in detail. As demonstrated by TPB Ajzen (2005) particular

direct rises because of desire. Objective to continue is affected by three components

Behavior beliefs: Belief of an individual to get the desired results, estimating and forecasting

the positive results.

Normative beliefs: It conveys messages to people and encourage them to make the right

financial decisions. Social norm is society pressure which affect the human while making

financial decision or changing behavior. Individual social behavior means to get help from

family, spouse or peer in financial decision making (financial socialization) and the motivational

belief to achieve the desired results. Motivation and hope to get normative expectation that are

shared with others.

Control beliefs: Theory of planned behavior describes how strong a human belief is about

performing certain behavior and result to be obtained. When a human is confident about results

then he decides he should take specific financial decision or not. Confidence level is associated

with the consciousness (financial knowledge). Once a human entered into the level of

consciousness, he ultimately enters the stage of intensity. If the human has basic financial

knowledge his intention to take decision increases. Attaining the level of intention to behave, it’s

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time to perform action or take financial decision to get desired financial result. If the human gets

the desired results then they will get satisfied and attain the level of financial satisfaction.

2.5 Theoretical Framework

According to Ajzen (1991) TPB describes the financial behavior, intention to behave which are

outcomes of attitudes, subjective norms and perceived behavioral control. The conceptual

framework suggests the following research questions: (1) How self-assessed financial knowledge

of an individual influences the financial behavior of an individual while making any decision? (2)

To what extent does financial knowledge impact the financial risk attitude of an individual while

taking financial decisions? (3) How much financial socialization affects the financial behavior of

an individual while taking financial decisions? (4) How much financial risk taking attitude

strengthens by the financial socialization and help in decision making? (5) How do FK and FS

impact the financial behavioral intention and financial risk attitude? (6) What is the relationship

among FB and its impact on financial satisfaction of an individual? (7) How much financial

socialization (subjective Norms) impact the behavior and attitude which ultimately leads to the

financial well-being of an individual?

Table 1 demonstrates the names and sorts of the factors, explored in this study.

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Table 1
Name of the Variables Abbreviation used for Types of Variables

the variables

Financial Satisfaction FSt Dependent Variable

Financial Behavior FB Mediating Variable

Financial knowledge FK Independent Variable

Financial risk attitude FRA Mediating Variable

Financial socialization FS Independent Variable

Financial Solvency FSo Independent Variable

2.5.1 Financial Knowledge and financial satisfaction:

Financial knowledge helps in taking right financial decisions which lead to financial satisfaction.

According to Joo & Grable (2004) financial knowledge effect financial satisfaction but its

direction of relation is not well determined. According to Archuleta et al., (2013) financial

knowledge is determinant of financial well-being. FK is the predictor of financial debt and

overall financial well-being (Norvilitis & Maclean, 2010). According to few researchers FK has

negative impact on financial satisfaction as an individual with financial knowledge always tries

to improve their lifestyle by better using financial instruments and never satisfies while on the

20
other hand a person with less or no financial knowledge never realize his poor financial situation

(Mugenda, Hira, and Fanslow, 1990; and Joo & Grable, 2004). Therefore, in the light of theory

and previous studies we hypothesize:

H1: There is impact Self-Assessed Financial knowledge (subjective FK) on financial

satisfaction of an individual.

Financial Knowledge Financial satisfaction

Fig.1

2.5.2 Financial Knowledge and financial Behavior:

FK influences the FB as an individual with FK will evaluate the information differently from the

individual with less financial knowledge and both will behave according to their knowledge

(Saurabh & Nandan, 2018). According to Bernheim, Gareet and Maki (2001) financial education

improves financial behavior. According to Perry and Morris (2005) individual with FK have

more rational behavior towards finances? Self-assessed FK is one of the most significant

determinants of FB (Courchane, 2005). Therefore, in the light of theory and previous studies we

hypothesize:

H2: There is impact of Self Assessed financial knowledge (subjective FK) on financial

behavior of an individual.

Financial Knowledge Financial Behavior

Fig.2

21
2.5.3 Financial knowledge, financial behavior and Financial Satisfaction:

Financial behavior has an impact on financial satisfaction. According to Xiao 2006, if a person

can handle its finances like paying bills on time, saving, investments planning etc. will be more

financially satisfied than the people who have no or less financial knowledge and are not capable

to manage their own finances. According to Xiao (2009) a person having positive financial

behavior since his childhood, it leads to a better quality of life.

“To develop financial behavior, one must have the financial knowledge” (Arifin, 2018).

According to Bowen (2002) FK is a key to FB and it is important for the well-being of society.

According to Joo and Grable (2004) positive FB leads to financial satisfaction. According to

Saurabh and Nandan (2018) FK and FB together changes the level of financial satisfaction.

Previous studies identify that FK is an important factor in determining FB which leads to

financial satisfaction. . Therefore, in the light of theory and previous studies we hypothesize:

H3: FB has positive impact on financial well-being of an individual.

H4: Financial behavior mediates the association between self-assessed FK and financial

well-being.

Financial Knowledge Financial behavior Financial satisfaction

Fig.3

22
2.5.4 Financial Knowledge and financial risk attitude:

As the direction of FK and financial satisfaction is not determined, the direction of FK and FRA

is not determined too. Therefore, it is difficult to identify an individual with financial knowledge,

might have high level to risk tolerance. According to Saurabh and Nandan (2018) financial

knowledge influences the FRA, where financial knowledge refers to the self-assessed FK or his

perception about knowledge of financial aspects. According to Joo and Grable (2004) a person

with more financial knowledge will have more financial risk tolerance. In this study we are using

risk attitude as a measure of FRA. Therefore, in accordance with theory and previous studies we

hypothesize:

Financial Knowledge Financial risk Attitude

Fig.4

H5: There is impact of Self assessed FK on financial risk attitude of an individual.

2.5.5 Financial knowledge Financial Risk Attitude and financial satisfaction:

According to Hira and Mugenda (1998) found that FK, FRA and financial stressors and many

other demographics and socio economic factor affects the financial satisfaction. “There is a

relationship among financial knowledge financial risk attitude and financial satisfaction”

(Falahati, Sabri, & Paim, 2012). These studies support the mediating hypothesis of financial risk

attitude. Therefore, in the light of theory and previous studies we hypothesize:

23
Financial knowledge Financial Risk attitude Financial satisfaction

Fig.5

H6: There is the impact of FRA on financial well-being of an individual.

H7: FRA mediates the relationship between FK and financial well-being of an individual.

2.5.6 Financial Socialization and financial Satisfaction:

“Financial socialization is the procedure by which youthful people acquire the frame of mind,

information and conduct which adds to their prosperity” (Hira, Sabri, & Loibl, 2012; Danes,

1994 and Ward, 1974). Financial decision making mainly depends on financial socialization

therefore the outcome of decision leads to satisfaction which ultimately result of socialization

(Saurabh & Nandan, 2018). According to Falahati et al, (2011) FK and FS has a positive and

significant impact on financial well-being or financial satisfaction. . Therefore, in the light of

theory and previous studies we hypothesize:

Financial Socialization Financial Satisfaction


Fig.6

H8: There is impact of FS on FSt of an individual.

2.5.7 Financial socialization and Financial Behavior:

According to Falahati et al, (2012) financial behavior is the main determinants of financial well-

being (Ward, 1974 and Danes, 1994). Financial behavior is also influenced by many factors like

financial knowledge, financial socialization and financial socialization agent and capabilities of

24
an individual how to manage finance. Therefore, in the light of theory and previous studies we

hypothesize:

H9: There is an impact of FS on FB of an individual.

2.5.8 Financial socialization financial behavior and financial Satisfaction:

In accordance with previous studies we come to know that financial socialization helps

development of financial behavior of an individual since his childhood and then this behavior

leads to financial decision making and if the outcomes are good it will lead to financial

satisfaction. Therefore, in the light of theory and previous studies we hypothesize:

H10: Financial behavior mediates the effect of FS on financial well-being.

Financial Financial behavior Financial


Socialization satisfaction

Fig.7

2.5.9 Financial socialization, financial risk attitude and financial satisfaction:

According to Saurabh and Nandan (2018) financial socialization has a bearing on FRA of an

individual, as FRA of an individual developed over some time, FRA is influenced by parents,

socializing agents peers etc. of individual. According to Danes and Yang (2014) financial

socialization has an influence on FB and attitude which leads to financial wellbeing. Therefore,

in the light of theory and previous studies we hypothesize:

H11: There is impact of FS on FRA of an individual.

25
H12: FRA mediates the relationship between financial socialization and financial well-being

of an individual.

Financial Financial risk Financial


socialization attitude Satisfaction

Fig.8

2.5.10 Financial Knowledge, financial solvency and financial satisfaction:

In the past we don’t find much work on this variable. According to Joo and Grable (2004)

financial solvency of an individual mediates the association between FK and financial well-being.

Financial Financial Solvency Financial


Knowledge Satisfaction

Fig.9

H13: There is impact of FK on financial solvency.

H14: Financial solvency has impact on financial socialization of an individual.

H15: Financial solvency mediates the effect of financial knowledge on financial well-being

of an individual.

2.6 Conceptual Framework

A research done by Suarabh and Nandan in 2018 on financial satisfaction, its determinants and

mediating effect of FB and FRA in India is taken as base of current study. There is an addition of

one variable (financial Solvency) in current study.

26
Financial
Knowledge

Financial Solvency

Financial
Financial Behavior Satisfaction

Financial Financial Risk


Socialization Attitude

Fig. 10

2.7 Hypotheses

The hypotheses of the current study are mentioned below.


H1: There is impact Self-Assessed FK (subjective financial knowledge) on financial well-being
of an individual.
H2: There is impact of Self Assessed FK (subjective financial knowledge) on FB of an individual.

H3: Financial behavior has positive impact on Financial Satisfaction.

H4: FB mediates the association between self-assessed FK and financial well-being.

H5: There is an impact of Self assessed FK on FRA of an individual.

27
H6: There is the impact of financial risk attitude on financial well-being of an individual.

H7: Financial risk attitude mediates the relationship between FK and financial well-being of an
individual.

H8: There is impact of FS on financial satisfaction of an individual

H9: There is an impact of financial socialization on FB of an individual.

H10: Financial behavior mediates the effect of FS on financial well-being.

H11: There is impact of FS on FRA of an individual.

H12: Financial risk attitude mediates the relationship between financial socialization and
financial satisfaction.

H13: There is impact of FK on financial solvency.

H14: Financial solvency has impact on financial socialization of an individual.

H15: Financial solvency mediates the effect of FK on FS.

Hypotheses are formed. Next chapter is about research methodology and these hypotheses are

tested in data analysis chapter.

28
CHAPTER 3

Research Methodology

Research methodology is all about methodology with research design, population, sample,

variables measurement and data analysis techniques.

3.1 Research Design

A quantitative research is carried to recognize and test the determinants of financial well-being.

To do a societal research, researchers should use quantitative method because of high level of

acceptability (Bell & Bryman, 2007).

3.1.1Unit of analysis:

Unit of investigation is the fundamental aspect a specialist looks into. In this investigation non-

managerial individual worker has been picked as unit of examination.

3.1.2 Time horizon

Data is collected at the same time from employees that are different in age, income and

geographic location. Cross section time horizon has used in this study.

3.1.3 Study setting

The examination is being done in an easygoing manner in common habitat with insignificant or

no scientist obstruction. This examination is done in non-thought up setting as relationship

studies are done in indigenous habitat. This study is done in non-contrived setting in natural

environment.

29
3.2 Research methodology

3.2.1 Population

The unit of research was commercial banking sector of Lahore i.e. Bank of Punjab, United bank

limited, Allied bank limited, etc. There are twenty commercial banks listed on Pakistan stock

exchange/ Karachi stock exchange. Each commercial bank has different no of branches in

different cities of Pakistan.

3.2.2 Sample

600 questionnaires with 35 items were distributed among the employees of different commercial

bank’s different branches of Lahore. Mainly Bank of Punjab, United Bank Limited, Allied Bank

Limited, Bank Alfalah, and Muslim Commercial banks were visited for data collection. 430

questionnaires were responded back. Out of 430 only 389 were filled completely.

3.2.3 Sampling technique

Non-probability sampling is used because the exact number of employees in each bank with

different branches is not known. Convenience sampling was used because of insufficient

resources.

3.2.4 Data collection tool

For primary data collection, a survey questionnaire is developed. The survey questionnaire is

used to study the natural phenomenon because data can be collected from the immediate

individual on whom the research is being done. Furthermore, survey questionnaire are

particularly helpful when external validity and generalizability of the results are must needed.

30
3.3 Variable measurement

A close ended structured questionnaire was used to measure each variable. 5 point Likert scale is

used to measure each variable.

3.3.1 Financial knowledge

A 4-item questionnaire is used to analyze the FK (subjective or self-assessed financial

knowledge). The construct is adopted from Robb and Woodyard (2011) to determine the impact

of subjective FK on FSt. Each item consists of 1= Strongly Disagree to 5= strongly Agree.

Cronbach’s α of FK is 0.63.

3.3.2 Financial Behavior

This questionnaire is adopted from Joo and Grable (2001). A 10-items questionnaire is used to

examine the FB of an individual. Each item consists of 1= Strongly Disagree to 5= strongly

Agree. Cronbach’s α of FB is 0.79.

3.3.3 Financial risk attitude

Financial risk attitude is proxy of financial risk tolerance is used to measure its effect on

financial satisfaction. A six-item questionnaire is adopted from Grable and Joo (2004). Each item

consists of 1= Strongly Disagree to 5= strongly Agree. Cronbach’s α of FRA is 0.77.

3.3.4 Financial socialization

A six-item construct is adopted from (Hira et al., 2012) to investigate the financial socialization

impact on financial satisfaction of salaried employees. Each item consists of 1= Strongly

Disagree to 5= strongly Agree. Cronbach’s α of FS is 0.71.

31
3.3.5 Financial satisfaction:

A six-item questionnaire is used to quantify the FSt of the employees working in banks.

Questionnaire is adopted from Hira and Mugenda (1998). Each item is ranging from 1 (strongly

disagree) to 5 (strongly agree). The estimation of Cronbach's α of FSt is 0.79.

3.3.6 Financial Solvency:

A three-item questionnaire is used to measure the financial solvency of the employees working

in banks. Questionnaire is adapted from (Porter, 1990) . Each item ranging from 1 (strongly

disagree) to 5 (strongly agree). The estimation of Cronbach's α of FSo is 0.62.

3.4 Data analysis Technique

As mentioned above data is collected through a construct assuming the association among the

variables. During data collection few problems arises as people were reluctant to give personal

information but within one month data was collected. After data collection data was tested by

(SPSS-16) and AMOS.

32
CHAPTER 4

DATA ANALYSIS AND FINDINGS

4.1 Introduction

Data analysis is done to test all the hypotheses using data we have collected through

questionnaire. In this chapter we will discuss from minor to major description of the data like

demographical analysis, mean, median, skewness, descriptive stats, normality tests and

hypothesis testing.

4.2 Respondent profile

This section is about respondents personal information i.e. age, gender, level of education,

marital status etc. the information is reported in the form of graphs and in the form of table for

convenience. About 200 of sample population are females with 51.4 percent. 48.6 percent of the

total population is male (n=189). About 5.1 percent of the population age range from 21-25

while 198 respondents falls under 26-30 age with 50.9 percentages. 151 respondents belong to

31-35 age groups and hold 38.8 percent of the total sample size. . Out of 398 respondents 235 are

respondent are from post-graduation while 154 are under graduates. 50.4 percent respondents are

married while rest of them is unmarried and hold 49.6 of the total population.

33
Table 2

Demographics

CHRACTERISTICS FREQUENCY PERCENTAGE

Gender

Female 200 51.4

Male 189 48.6

Total 389 100

Age

21-25 20 5.1

26-30 198 50.9

31-35 151 38.8

36- more 20 5.1

Total 389 100

Qualifications

Post graduate 235 60.4

Undergraduate 154 39.6

Total 389 100

34
Marital Status

Single 196 50.4

Married 193 49.6

Total 389 100

4.3 Data Normality Analysis

In 1979 Bulmer passed a thumb rule about Skewness of data. According to that thumb rule the

skewness value must lie between +1 to -1. Table 1 shows the skewness values of each variable

and we come to know that all values are between =1 to -1. In 1998 Balandam and MacGillivary

passed a rule for kurtosis, according to that rule kurtosis values must be between +3 to -3. The

table draw below shows that kurtosis of all variables is within +3 to -3 threshold. Data is

normally distributed and we can run analysis.

35
Table 3

Mean, St.deviation, Skewness and Kurtosis

variables Mean St. deviation Skewness Kurtosis

Financial Knowledge 3.2551 .78462 -.648 .671

Financial Risk Attitude 3.1911 .80753 -.548 .705

Financial Behavior 2.8410 .74240 -.581 .173

Financial satisfaction 3.4272 .82425 -.663 .271

Financial solvency 3.3783 .87651 -.613 -.038

Financial Socialization 3.0998 .82224 -0.656 -.251

4.4 Reliability analysis

Reliability of the construct is analyzed by measuring Cronbach's α. Cronbach's α for FK is 0.63,

Cronbach's α for FS is 0.71 while the estimations of Cronbach's α for FRA is 0.77 and for FSt its

value is 0.79. Cronbach's α for FB and FSo is 0.63 and 0.62, which is underneath the edge

estimation of 0.7. In any case, according to (Gliem and Gliem, 2003), the social thought of

research empowers the researcher to continue with the build having Cronbach's α underneath 0.7.

36
Table 4
Variable Cronbach alpha

Financial Satisfaction 0.79

Financial Socialization 0.71

Financial Solvency 0.62

Financial knowledge 0.63

Financial Risk attitude 0.77

Financial Behavior 0.79

4.5 Correlation Analysis

The correlation analysis is done to distinguish the kind of association and relationship among the

factors utilized in the examination. Table 4 demonstrates that financial knowledge and FRA

frame of mind are emphatically and firmly associated with one another with r=.609 and

demonstrates a huge relationship. FK and FB have noteworthy and positive connection with

r=.224. FK and FSt are emphatically identified with one another and indicates noteworthy

relationship r=.496. FK and FS are decidedly connected with one another with r=.655 and shows

critical relationship. There is a positive and solid connection between financial risk attitude and

financial behavior with r=.441. Financial risk attitude demeanor and financial satisfaction are

decidedly associated with r=.440. Financial risk attitude and financial socialization are decidedly

connected with one another with r=.181. Financial behavior and financial socialization are

emphatically corresponded with r=.407 and shows critical relationship.

37
Table 5
Correlation Analysis

Sr.No Variables 1 2 3 4 5 6

1 Financial Knowledge 1

2 Financial Risk .609** 1

Attitude

3 Financial Behavior .224** .441** 1

4 Financial Satisfaction .496** .440** .407** 1

5 Financial .655** .597** .209** .424** 1

Socialization

Financial Solvency
6 .181** .143** .348** .825** -1.53 1

**Correlation is significant at the 0.01 level (2-tailed).

FB and financial socialization are decidedly connected with one another and demonstrates a

noteworthy association with r=.209. There is a positive and huge relationship among financial

socialization and financial satisfaction with r=.424. Every one of the factors are altogether

38
related with one another at 0.01 noteworthiness level. Financial solvency and financial

knowledge are critical with r=.181. Financial risk attitude and financial solvency are altogether

and emphatically associated with r=.143. Financial behavior and financial solvency are decidedly

corresponded with r=.347, huge at level of 0.01. Financial satisfaction and financial solvency are

corresponded with r=.825. There is certain and critical relationship found between financial

solvency and financial socialization.

4.6 Confirmatory factor Analysis (CFA)

In statistics, confirmatory factor analysis is a special technique to analyze the factors. This

technique is mostly used in social researches. This is used to analyze the consistency of the

construct. This analysis is done to test nature of construct with the understanding of the

researcher. This technique helps in verifying the structure of the observed variable. In this study

Amos 23 is used to make path diagrams for each variable. There are few values which should be

taken into consideration while checking model fit such as CFI, RMSEA, GFI and AGFI.

According to Hu and Bentler (1999) value of CFI should be above 0.9 but the threshold value for

CFI is 0.90 or greater. GFI and AGFI should be greater than 0.90 for good model fit. The value

of RMSEA shows the marginal fitness of the model and it should be less than 0.08.

39
4.6.1 Financial Behavior:

Fig. 11
In this study financial behavior is examined separately because overall CFA of the model was

not fit. While examining financial behavior separately some questions were deleted like FB1,

FB6 and FB7 because modification indices of these items were not good. CMIN/DF of FB is

2.792, RMR of financial behavior is .058, and GFI of financial behavior is .986 AGFI of

financial behavior is .945, CFI of financial behavior is .985, and RMSEA of financial behavior

is .068.

40
Table 6
Model Result Benchmark

CMIN/DF 2.792 less than 3

RMR .058 Closer to 0

GFI .986 Greater than or equal to 0.9

AGFI .945 Greater than or equal to 0.8

CFI .985 Greater than or equal to 0.9

RMSEA .068 Less than 0.08

4.6.2 Financial Knowledge:

Financial knowledge is examined separately because overall CFA model was not fit. So,

CMIN/DF of financial knowledge is 5.061, RMR of financial knowledge is .042, GFI of

financial knowledge is .994 AGFI of financial knowledge is .936, CFI of financial knowledge

is .985, RMSEA of financial knowledge is .068. Overall model is fit.

41
Fig.12
Table 7
Model Result Benchmark

RMR .042 Closer to 0

GFI .994 Greater than or equal to 0.9

AGFI .936 Greater than or equal to 0.8

CFI .985 ≥0.9

RMSEA .068 Less than 0.08

4.6.3 Financial risk attitude:

In the current study we have analyzed financial risk attitude separately because overall

confirmatory factor analysis model was not fit. FRA is tested independently and one question is

eliminated because modification indices of FRA3 question was not good. So, CMIN/DF of

financial risk attitude is 3.125, RMR of financial risk attitude is .017, GFI of financial risk

42
attitude is .997 AGFI of financial risk attitude is .952, CFI of financial risk attitude is .997 which

is near to 1 and RMSEA of financial risk attitude is .074. Overall model is fit.

Fig.13
Table 8
Model Result Benchmark

CMIN/DF 3.125 less than 3

RMR .017 Closer to 0

GFI .997 Greater than or equal to 0.9

AGFI .952 Greater than or equal to 0.8

CFI .997 Greater than or equal to 0.9

RMSEA .074 Less than 0.08

43
4.6.4 Financial Socialization:

In the current study we have analyzed the financial behavior separately because overall model

was not fit. Financial socialization is analyzed separately and FS6 question was deleted because

modification indices of FS6 question was adverse. The results shows that CMIN/DF of financial

socialization is 1.981, RMR of financial socialization is .037, GFI of financial socialization

is .996 AGFI of financial socialization is .969, CFI of financial socialization is .997, and

RMSEA of financial socialization is .050.

Fig.14

44
Table 9
Model Result Benchmark

CMIN/DF 1.981 less than 3

RMR .037 Closer to 0

GFI .996 Greater than or equal to 0.9

AGFI .969 Greater than or equal to 0.8

CFI .997 Greater than or equal to 0.9

RMSEA .050 Less than 0.08

4.6.5 Financial satisfaction:

In the current study we have analyzed the financial behavior separately because overall

confirmatory factor analysis model was not fit. So, it is examined separately and one question

was deleted because a modification index of FSt2 question was adverse. So, CMIN/DF of

financial satisfaction is 5.718, RMR of financial satisfaction is .015, GFI of financial satisfaction

is .994 AGFI of financial satisfaction is .913, CFI of financial satisfaction is .994 which is close

to 1 and RMSEA is .079. Overall model is fit.

45
Fig.15
Table 10
Model Result Benchmark

RMR .015 Closer to 0

GFI .994 Greater than or equal to 0.9

AGFI .913 Greater than or equal to 0.8

CFI .995 Greater than or equal to 0.9

RMSEA .079 Less than 0.08

46
4.6.6 Financial Solvency:

In the present study we have analyzed the financial solvency separately because overall model

was not fit. So, it is examined separately. So, CMIN/DF of financial solvency is 3.718, RMR of

financial solvency is .015, GFI of financial solvency is .994 AGFI of financial solvency is .913,

CFI of financial solvency is .994 which is close to 1 and RMSEA of financial solvency is .079.

Overall model is fit.

Table 11
Model Result Benchmark

RMR .015 Closer to 0

GFI .994 greater than or equal to 0.9

AGFI .913 Greater than or equal to 0.8

CFI .995 greater than or equal to 0.9

RMSEA .079 Less than 0.08

47
Fig .16

4.7 Structural Equation Model (SQM)

SQM is a casual modeling technique which includes set of mathematical, statistical and

algorithmic models. It is used to compute the direct and indirect relationship among the

variables. By using SEM one can do CFA and path analysis. The SQM is used to measure the

latent variables also called unobserved variable. This is used to calculate the relationship

between observed and unobserved variables and their impact too. It is used to check regression

analysis, Anova changes and correlation among variables. In social sciences normally SEM is

used. In this study Amoss 22 is used.

48
Fig.17

49
4.7.1 Standardized regression Weights:

Table 12
Path Estimates P-value

FRA < ---- FK .554 ***

FRA < ---- FS .378 ***

FB < ---- FS .095 .060*

FB < ---- FK .260 ***

FSt < ---- FS .454 ***

FSo < ---- FK .065 .199

FSt < ---- FSo .248 ***

FSt < ---- FK .546 ***

FSt < ---- FB .176 ***

FSt < ---- FRA .514 ***

Financial knowledge has positive and solid effect on FRA with the estimation of 0.554 which is

critical at the 0.01 essentialness level. FS has positive and huge effect on FRA with the

estimation of .378. FK has positive and critical effect on FB with the estimation of .260. FS has

positive and noteworthy effect on FSt with the estimation of .454. FK has noteworthy and

positive effect on FSt with the estimation of .454. FB has positive and critical effect on FSt with

50
the estimation of .176. FRA has positive and noteworthy effect on FSt with the estimation

of .514.

4.8 Mediation Analysis

4.8.1 Bootstrapping Strategy:

The present study includes three mediating variables FB, FRA and FSo and one dependent

variable which are financial satisfaction. For analyzing the mediation, bootstrap techniques is

being used. It is used to measure the direct impacts of independent variables on dependent

variable and also determine the mediating impact through structural equation model SEM. It will

help us to analyze whether there is partial mediation complete mediation.

51
Table 13

Standardized Direct effect

Path Beta values P-value

FRA < ---- FS .378 ***

FRA < ---- FK .554 ***

FSo < ---- FK .065 .377

FB < ---- FS .095 .108

FB < ---- FK .260 ***

FSt < ---- FSo .248 ***

FSt < ---- FS .428 ***

FSt < ---- FK .500 ***

FSt < ---- FRA .514 ***

FSt < ---- FB .176 ***

52
Table 14

Standardized Indirect effect

Path Beta values P-value

FSt  FB FK .046 .001

FSt  FRA FK .284 .001

FSt  FSo FK .016 .353

FSt  FB FS .025 .092

FSt  FRA FS .151 .001

53
Table 15

Mediation Results and Paths

Mediation Path Direct Effect W/0 Direct Effects Indirect Effects Mediation Result

Mediation W/Mediation

FK ---> FB ---> FSt 0.546*** 0.500*** 0.153*** Partial Mediation

FK ---> FRA ---> FSt 0.546*** 0.377*** 0.169*** Partial Mediation

FK ---> FSo --- > FSt 0.546*** 0.530*** 0.016 (NS) No Mediation

FS ---> FB --- > FSt 0.454*** 0.428*** 0.092(NS) No Mediation

FS ---> FRA --- > FSt 0.454*** 0.303*** 0.151*** Partial Mediation

*** p<.001, p<.05, NS= not significant.

54
4.9 Finding of hypothesis

This table explains the hypotheses, results with numerical values.

Table 16
Hypotheses Path Beta P-values Results

H1 : There is impact Self- FK ----> FSt 0.500 0.001 Full Supported


Assessed FK (subjective
FK) on financial well-
being of an individual.

H2 : There is impact of Self FK ----> FB 0.206 0.001 Full Supported


Assessed financial
knowledge (subjective
FK) on FB of an
individual.

H3 : FB has an impact on FB ----> FSt .176 0.001 Full Supported


Financial well-being.

H4 : FB mediates the FKFBFSt .153 0.001 Full Supported


association between self
assessed FK and FSt.

H5 : There is an impact of Self FK ----> FRA .554 0.108 Full Supported


assessed FK on financial
risk attitude of an
individual.

55
H6 : There is an impact of FRA FRA ----> FSt .514 0.001 Full Supported
on financial well-being of
an individual.

H7 : FRA mediates the FKFRA  FSt .169 0.001 Full Supported


association between FK
and FSt of an individual.

H8 : There is impact of FS on FS-- FSt 0.428 NS Not Supported


financial well-being of an
individual.

H9 : There is an impact of FSFB .095 NS Not Supported


financial socialization on
financial behavior of an
individual.

H10 : Financial behavior FSFBFSt .092 0.001 Not Supported


mediates the effect of FS
on financial well-being.

H11: There is impact of FS on FSFRA .248 0.001 Full Supported


financial risk attitude of an
individual.

Financial risk attitude

56
H12: mediates the relationship
between FS and FSt.
FSFRAFSt 0.151 0.001 Full Supported

H13: There is effect of FK on FKFSo 0.065 NS Not Supported


FSo.

H14: Financial solvency has FSoFSt .248 NS Not Supported


impact on financial
socialization of an
individual

H15: Financial solvency FKFSoFSt 0.016 NS Not Supported


mediates the effect of FK
on FSt.

57
CHAPTER 5

Discussion and conclusion

5.1 Discussion and conclusion

The logic behind this study was to identify the directions of the determinants of financial

satisfaction and how FK, financial satisfaction directly influence the financial satisfaction and

what are the results when we take three different mediators separately i.e. FB, FRA and FSo.

This study and its outcomes resembles with the studies done in past.

According to (Falahati, Sabri, & Paim, 2012) FK and upbringing of the children impact their

behavior and attitude which ultimately impact the FSt.

On the basis of our results we also conclude that financial knowledge and financial socialization

have impact on financial well-being.

H1 was developed to analyze the impact of FK on financial satisfaction and present study fully

supports this hypothesis. There is positive and significant impact of FK on financial satisfaction.

Our study supports the previous studies done by (Joo & Grable, 2004).

H2 was constructed to test the influence of financial knowledge on FB. The present study

supports the hypothesis and proves that there is a positive and significant relationship between

FK and FB. This study results supports the previous studies done by (Saurabh & Nandan, 2018

and Joo & Grable, 2004).

H3 was designed to analyze the impact of FB on financial well-being. This study supports this

hypothesis and shows a positive and significant impact of FB on financial satisfaction of an

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individual. This study supports the previous studies like (Falahati, Sabri, & Paim, 2012 and Xiao

& Porto, 2017).

H4 was developed to analyze the mediating impact of FB on the relation of financial knowledge

and financial satisfaction. This study supports this hypothesis and proves that financial

knowledge changes human behavior towards financial satisfaction. It supports many previous

studies (Ali, Abd Rahman, & Bakar, 2015 and Joo & Grable, 2004).

H5 was constructed to test the impact of FK on financial satisfaction. And this study proves this

hypothesis and shows the positive and significant impact of financial knowledge on financial risk

taking attitude. This study supports the previous studies (Saurabh & Nandan, 2018).

H6 was designed to check the impact of FRA on financial satisfaction and the results supports

this hypothesis and proves that FRA has an impact on financial satisfaction. This study supports

previous study results as (Saurabh & Nandan, 2018).

H7 was developed to analyze the mediating impact of financial risk attitude on the association of

financial knowledge and financial satisfaction. This study supports this hypothesis and proves

that FRA mediates FK and FSt relationship. As proved in previous studies (Ali, Abd Rahman, &

Bakar, 2015 and Joo & Grable, 2004).

H8 was developed to analyze the impact of financial socialization on financial satisfaction and

this study proves there is a strong and significant impact of socialization on financial satisfaction.

This study supports the previous studies (Danes & Yang, 2014) and Saurabh & Nandan, 2018).

H9: This hypothesis was developed to analyze the impact of financial socialization on financial

behavior. Our study doesn’t support this hypothesis because there are few studies in the past that

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proves that FK impact FB than financial behavior impact financial attitude, and then financial

satisfaction there is no single mediation but serial mediation (Arifin, 2018).

H10 was developed to check the impact of FB as mediator on financial socialization and financial

satisfaction relation but this study’s results do not support this hypothesis as previous studies

show that financial behavior should be moderator or in serial mediation to impact financial

satisfaction.

H11 was designed to analyze the impact of FRA on financial satisfaction. This study supports this

hypothesis and shows positive and significant relationship between the two variables and it

supports the previous studies (Saurabh & Nandan, 2018).

H12 was constructed to analyze the mediating impact of financial risk attitude on financial

socialization. The current study supports this hypothesis and shows a positive and significant

relation as done in the previous studies (Saurabh & Nandan, 2018).

H13 was developed to analyze the impact of FK on financial solvency. After analysis, it is proved

that there is no relation between FK and FSo. There is no impact of FK on FSo.

H14 was constructed to analyze the impact of financial solvency on financial well-being. The

current study supports this hypothesis and proves that financially solvent person is more

financially satisfied (Joo & Grable, 2004).

H15 was designed to analyze the mediating impact of solvency on financial knowledge and

financial satisfaction. This study doesn’t support this hypothesis. No work has been done on this

relationship since 2004.

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5.2 Implications of study

5.2.1 Theoretical implications

The current study provides the broad perception of behavior, attitude and behavior intention and

financial socialization and their theoretical and conceptual representation, direction of

relationships. Impact of one variable on financial satisfaction of the individual along with

another variable. According to TPB attitude make behavior and many other factors impact

attitude and behavior, in this context two hypotheses of the current study are rejected. At the

same time there are many studies dealing with direct impact of behavior or behavioral change on

financial satisfaction. This study provides evidence that financial satisfaction is determined by

financial socialization, risk attitudes, financial behavior and financial solvency too.

5.2.2 Practical Implication:

The present research work encourages the researchers, policy makers, managers of wealth

management firms, financial advisors and government to understand the level of FSt among

people. It is helpful for the policy makers whether at organizational level or at national level how

people perceive financial satisfaction and what are necessary things they can do to improve the

financial satisfaction of the employees or individuals. This study not only provides numerical

and theoretical results but also suggests the policy makers to appreciate the employees to learn

about basic financial knowledge and how to manage it. They should make guidelines and at

organizational level they should organize different workshops for the employees to learn

understand how to manage money effectively.

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Financial advisors can guide their clients about financial products. How much a product have

financial risk and how much client can bear risk. Policy makers at government level can educate

people how to manage money by making some advertisement or programs.

Government bodies can utilize this research in policy formation in order to work for individual

financial satisfaction. Specially, developing countries where lower middle class people are more

and striving for financially satisfied life.

5.3 Limitation

This study has several limitations. These limitations can be utilized by the researchers for further

research and knowledge addition.

 In current study cross section time horizon has been used. Research can be done in different time

periods while providing different kinds of situations to check the financial satisfaction of an

individual.

 The current study was restricted in terms of respondents and area of study. Only 389 respondents

from Lahore district are part of this study. This sample does not illustrate the entire population of

Lahore.

 In current study we have not test the serial and moderating mediation of variables and the impact

of variables. We have only analyzed the dependent variable, independent variables and their

impacts on mediation variable. Serial mediation may impact on results.

5.4 Recommendation and future direction

The current study suggests some recommendations for further research work to improve and

expand the quality and quantity of work.

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 In future researcher can expand his study by adding financial stressor as mediating variables.

 Future research can be done by taking serial mediation.

 Future studies can be conducted in different socio economic environment.

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