Evaluating the impact of financial and behavioural determinants on consumptive behaviour through the mediating role of mental accounting

The role of mental accounting has emerged more clearly in the light of the contemporary changes in organisations and environments. Financial and behavioural determinants are increasingly recognised as key drivers of individual consumption patterns. The present study investigates the financial and behavioural factors that interact through mental accounting to shape consumptive behaviour among working individuals in Goa, India. The independent variables comprised financial factors, including digital wallet and financial literacy, and behavioural factors, such as overconfidence and time orientation, while consumptive behaviour was the dependent variable. This study is grounded in behavioural finance theory and employs a quantitative design, using survey data from 328 working individuals in Goa collected through a proportionate stratified random sampling method and analysed using partial least squares-structural equation modelling (PLS-SEM). Results show that digital wallets, financial literacy, and overconfidence significantly influence mental accounting, while overconfidence and mental accounting significantly affect consumptive behaviour; however, time orientation, digital wallets, and financial literacy show no significant direct effect on consumptive behaviour. Mental accounting does not mediate the relationship between digital wallets and consumptive behaviour, but fully mediates the relationship between financial literacy and consumptive behaviour.