Unpacking antecedents of financial resilience: CARAPACE framework

What the paper says

Purpose The study attempts to develop a scale for the measurement of financial resilience using all antecedents that combine behavioural as well as socio-demographic factors for the reason here is no such concrete model/scale available. Design/methodology/approach To develop an eight-factor financial resilience framework (named CARAPACE), a systematic literature review was conducted, where the authors identified different components found to be linked with financial resilience. Out of all responses from individual investors (who invest in primary as well as secondary markets), 370 responses were fit for use. Exploratory factor analysis was conducted to cluster constructs into eight different factors, where each letter of CARAPACE represents one personality trait. Findings The research found the behavioral traits to be Confidence, Attitude, Recoverability, Accessibility, Perseverance, Adaptability, Commitment, and Eunoia, which influence financial resilience. The name is inspired by the CARAPACE that acts as a shock absorber in animals and gives them a protective shield from unidentified stresses. Using this model, an individual can be assessed as financially resilient or vulnerable. Practical implications The study provides a methodology for measuring financial resilience by integrating behavioural and financial factors that affect any individual’s coping mechanisms and economic vulnerability (like ease of repayment, financial resources availability, financial knowledge, confidence, levels of social capital, financial crisis management, etc). Originality/value The research may provide novel insights towards the country’s first Financial Resilience measurement model. It will help industrialists and academicians to identify different behavioral aspects to be considered while strategizing the customized portfolios.