Financial fragility and stress in the COVID-19 crisis: evidence from Colombian Households
Vivian Cruz Castañeda

Abstract:

We aim to determine the relationship between four factors financial literacy, financial readiness pre­-COVID, financial fragility and impact or stress of the COVID crisis using a survey applied to 856 Colombian adults. After applying the survey, we use Principal Component Analysis (PCA) in order to build an index for each factor. Then, we use an ordered logit model to test our hypotheses with the indexes. We found that financial fragility and the lack of financial readiness or preparation pre-COVID have a negative effect on the impact or the stress of the POST-COVID crisis in Colombian households. Findings indicated that workers who have financial education are more prepared to face the negative effects on their finances, which reduces the probability to become financially fragile. We corroborate the same results using a structural equation model.

Speaker:

Economista con Maestría en Ciencias en Finanzas y candidata a Doctorado en Economía por la universidad EAFIT, Medellín, Colombia. Experiencia académica en diferentes áreas de Economía y Finanzas, matemáticas aplicadas a finanzas, matemáticas financieras, microeconomía e Investigación de operaciones. Actualmente se desempeña como profesora de finanzas de pregrado y posgrado en la Universidad EAFIT y ha realizado labores de investigación en las áreas de banca y finanzas con el Banco de la República en Colombia y el Banco Interamericano de Desarrollo.