Title: Financial Literacy and Household Consumption Dynamics in Vietnam: A Behavioral Economics Perspective on Emerging Market Consumer Decision-Making
Authors: Nguyen Ngoc Thien Kim LE and Nguyen Ngoc Lien HOANG
Volume: 9
Issue: 6
Pages: 393-404
Publication Date: 2025/06/28
Abstract:
This research investigates the intricate relationship between financial literacy and household consumption patterns within Vietnam's rapidly evolving economic landscape. Drawing upon behavioral economics theory and employing structural equation modelling through partial least squares (PLS-SEM), this study examines how financial literacy influences consumer spending decisions amongst Vietnamese households. The research utilises a comprehensive dataset of 485 respondents across diverse demographic segments to explore the mediating and moderating mechanisms underlying financial decision-making processes. Findings reveal that financial literacy significantly influences household consumption dynamics through multiple pathways, including enhanced planning capabilities, improved risk assessment, and more sophisticated budgeting behaviours. The study demonstrates that Vietnamese consumers with higher financial literacy levels exhibit more optimised consumption patterns, characterised by increased savings propensity and strategic spending allocation. Furthermore, the research identifies demographic moderators, including age, income level, and educational attainment, which amplify or attenuate the financial literacy-consumption relationship. These findings contribute to the growing body of knowledge on consumer behaviour in emerging markets whilst providing practical insights for financial education policy development in Vietnam. The research establishes a theoretical framework that integrates behavioral economics principles with emerging market consumer dynamics, offering novel perspectives on financial decision-making in transitional economies.