Relationship between financial stress and financial well-being of micro and small business owners: Evidence from India

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Micro and small businesses financially suffered due to COVID-19 in India. This financial suffering created financial stress among them and deteriorated their financial well-being. However, micro and small business owners exhibit financial resilience by bouncing back to regular business activities through their hope, optimism, and self-efficacy, which are the components of positive psychological capital. This study analyzes the relationship between financial stress and financial well-being of micro and small firm owners keeping financial resilience as a mediator and positive psychological capital as a moderator in the mediation. This descriptive analysis employed a survey method to collect primary data using the interview method. The interview method was used as most micro and small business owners are comfortable with interaction rather than filling out the questionnaires due to the language barrier. The sample size is 384 respondents, as per Krejcie and Morgan’s formula. The mean scores indicate a moderate degree of financial stress (2.354), financial resilience (2.623), and financial well-being (2.637). The level of financial stress differs based on the respondents’ gender. Financial stress is more among female business owners (2.504) than their male counterparts (2.265).
Further, business owners who earn more have a higher level of financial resilience (2.985), psychological capital (2.951), and financial well-being (2.711). Financial stress significantly impacts financial well-being (28.4%). Financial resilience has a partial mediation effect (65%) on financial stress and financial well-being. Finally, psychological capital moderates indirect relationships among financial stress, financial resilience, and financial well-being.

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    • Figure 1. Research model
    • Table 1. Differences in personal and business-related characteristics
    • Table 2. Financial stress and its dimensions
    • Table 3. Financial resilience and its dimensions
    • Table 4. Psychological capital and its dimensions
    • Table 5. Financial well-being and its dimensions
    • Table 6. Statistical properties of the constructs
    • Table 7. Mediation effect of financial resilience
    • Table 8. Model fit
    • Table 9. Model coefficients
    • Table 10. Conditional indirect effects
    • Table 11. Index of mediated moderation
    • Table 12. Hypotheses testing
    • Conceptualization
      Thangaraj Ravikumar, Mali Sriram, Vinita Seshadri
    • Data curation
      Thangaraj Ravikumar, Mali Sriram, Nagalingam Kannan, Issac Elias, Vinita Seshadri
    • Formal Analysis
      Thangaraj Ravikumar, Vinita Seshadri
    • Investigation
      Thangaraj Ravikumar, Mali Sriram, Nagalingam Kannan, Issac Elias, Vinita Seshadri
    • Methodology
      Thangaraj Ravikumar, Mali Sriram, Nagalingam Kannan, Issac Elias
    • Resources
      Thangaraj Ravikumar, Nagalingam Kannan, Issac Elias
    • Software
      Thangaraj Ravikumar, Nagalingam Kannan, Issac Elias, Vinita Seshadri
    • Supervision
      Thangaraj Ravikumar, Issac Elias, Vinita Seshadri
    • Writing – original draft
      Thangaraj Ravikumar
    • Writing – review & editing
      Thangaraj Ravikumar, Mali Sriram, Issac Elias
    • Project administration
      Mali Sriram, Nagalingam Kannan, Issac Elias, Vinita Seshadri
    • Validation
      Mali Sriram, Vinita Seshadri
    • Visualization
      Nagalingam Kannan, Vinita Seshadri