Financial Anxiety in Pakistani Rural University Students: An Empirical Research of the Factors and Policy Interventions

Abstract

The current study finds out the factors which can impact financial worry among Pakistani university students attending schools in rural Pakistani areas, a sample that has been often overlooked in research on financial health. The analysis of the influence of contextual socioeconomic factors (gender, income level, family dependency) and financial literacy and coping systems on financial anxiety is done on the basis of the Life Cycle Hypothesis and the Behavioral Finance Theory, and the study was conducted on 203 students of rural Punjab (Sialkot, Gujarat, and Gujranwala). The data were evaluated with the help of the Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4.0. This paper will review how low academic performance and lack of financial knowledge influence financial anxiety amongst poverty-stricken university students in Pakistan rural communities. On behavioral finance theory, the study employs Structural Equation Modeling (PLS-SEM) to assess the structural relationships using the data gathered by the students in Sialkot, Gujarat and Gujranwala. The findings revealed that the beta value of financial anxiety of low academic performance was most significantly influential in terms of p value and f square ( 0.320, p < 0.001, f 2 = 0.120) indicating that academic underachievement was most strongly accompanied with the psychological pressure in economically vulnerable environments. Further, the low financial knowledge was also discovered to play an important role in influencing financial anxiety beta value p value and f square ( = 0.220, = 0.001, = 0.057), which implies that the lack of financial literacy is a significant factor in causing students to be stressed when it comes to managing personal finances. The model explained 17.8% variance (R 2 = 0.178 ) of financial anxiety, which is low in terms of explanatory power in an exploratory model. Although the model fit (SRMR = 0.116) fell short of the ideal standards slightly, it is still acceptable in the framework of research in behavioral and social sciences. These findings highlight the importance of specific academic and financial literacy programs in rural post-secondary institutions of higher learning. Such findings underscore the need to implement targeted interventions by education institutions and policy makers such as provision of financial literacy, psychological counselling and need-based scholarships, especially to low-income students and female students. The research provides practical and evidence-based recommendations toward the reduction of financial anxiety among Pakistani students of the university who have to travel to distant regions and interesting information on the subject of financial psychology in developing countries.