Financial Literacy and Financial Resilience: The Mediating Roles of Self-Efficacy, Financial Behavior, and Financial Well-Being: Evidence from Batam City

Abstract

Managing personal finances has become increasingly challenging amid changing economic conditions, rising living costs, and growing financial uncertainty. This study examines the relationship between financial literacy and financial resilience by investigating the mediating roles of financial self-efficacy, financial behavior, and financial well-being among residents of Batam City. A quantitative cross-sectional approach was employed using data from 453 respondents, which were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4. The results show that financial literacy has positive and significant effects on financial self-efficacy (β = 0.418, p < 0.001), financial behavior (β = 0.415, p < 0.001), and financial well-being (β = 0.218, p < 0.001). Financial well-being has the strongest direct effect on financial resilience (β = 0.472, p < 0.001). The indirect-effect analysis confirms significant mediation through financial self-efficacy (β = 0.085, p < 0.001) and financial behavior (β = 0.132, p < 0.001), as well as significant sequential mediation through financial self-efficacy and financial well-being (β = 0.040, p = 0.002). These findings indicate that financial literacy contributes to financial resilience through psychological, behavioral, and well-being mechanisms. The study highlights the importance of financial education that not only strengthens financial knowledge but also enhances financial confidence, promotes positive financial behavior, and improves financial well-being.