Role of financial stress in the financial well-being of small business owners

Financial stress adversely impacts well-being by affecting mental and emotional health, decision-making, physical health, relationships, work performance, and long-term planning. It leads to anxiety, poor choices, health issues, strained relationships, reduced productivity, and hindered future planning. Addressing financial stress through financial planning and financial education can improve overall financial well-being. This study investigates how digital financial inclusion (DFI) acts as a mediator between financial vulnerability (FV) and financial wellbeing (FWB) for small business owners in Bangalore, India. The research identifies important factors that cause differences in FV including marital status, education, and business type. Conversely, gender, age, and income have no significant statistical relevance in explaining the differences in FV. The DFI is significantly explained by age, income, and business characteristics, whereas gender, marital status, and education have no significant effect on the DFI. Furthermore, age, income, business type, and nature cause differences in FWB, whereas gender and education do not. The research reveals a significant positive relationship between FV and DFI (0.263), suggesting that higher levels of digital financial inclusion can slightly decrease financial vulnerability slightly. A moderate relationship (0.314) between FWB and FV indicates that enhanced financial well-being results in reduced financial vulnerability. The DFI is also strongly correlated (0.780) with FWB, emphasizing its crucial role in improving financial well-being. DFI plays a significant mediating role between FV and FWB, with a total effect of 0.4872 and an indirect effect of 0.3449. The study emphasizes the significant role of DFI in enhancing the financial stability and prosperity of small business proprietors, with a VAF of 70.79%.