Financial fragility and financial stress during the COVID-19 crisis: evidence from Colombian households


  • Raul Armando Cardona-Montoya Universidad EAFIT, Medellin, Colombia
  • Vivian Cruz Department of Economics and Finance, EAFIT University, Medellin, Colombia; Ciencias Economicas y Administrativas, Universidad EIA, Envigado, Colombia
  • Samuel Arturo Mongrut Department of Finance, Universidad del Pacıfico, Lima, Peru; Universidad Autonoma de Nuevo Leon, San Nicolas de los Garza, Mexico


Financial fragility, Financial literacy, COVID-19, Households, Emerging country



Our findings indicate that workers with more financial education were more prepared to face the negative effects on their finances from COVID. This ability reduces the probability of becoming financially fragile and experiencing financial stress.


The authors applied a survey questionnaire to 856 Colombian adults and used principal component analysis to build an index for each factor. Then, the authors used a linear regression model with the indexes to test our hypotheses and verify our results using a structural equation model.


Our findings indicate that workers who have more financial education are more prepared to face the negative effects on their finances, which reduces the probability of becoming financially fragile and having financial stress.

Research limitations/implications

The authors found that there is no significant relationship between financial literacy and financial fragility, neither between financial literacy and financial stress, so a better financial education will not lower financial fragility and stress unless it is being applied by households through better financial preparedness.

Practical implications

It is important to highlight that the pandemic not only taught us to improve biosecurity measures but also that financial strength, ability to work remotely and income diversification were key factors in facing this adverse shock, the authors show that high levels of financial education have a positively relationship with the ability of individuals to manage their resources, so private and public institutions have to promote better financial education.


This is the first study that applies the four different indexes to an emerging country (i.e. Colombia), and the first one to create and use a financial stress index.



Download data is not yet available.


Ali, L., Khan, M. and Ahmad, H. (2020), “Financial fragility of Pakistani household”, Journal of Family and Economic Issues, Vol. 41 No. 3, pp. 572-590, doi: 10.1007/s10834-020-09683-y.

Anderloni, L., Bacchiocchi, E. and Vandone, D. (2012), “Household financial vulnerability: an empirical analysis”, Research in Economics, Vol. 66 No. 3, pp. 284-296, doi: 10.1016/j.rie.2012.03.001.

Bilyk, O., Ho, A., Khan, M., Vallée, G. and June (2020), “Household indebtedness risks in the wake of COVID-19, Bank of Canada. Analytical note 2020-8”, available at:

Brunetti, M., Giarda, E. and Torricelli, C. (2020), “Financial fragility across europe and the US: the role of portfolio choices, household features and economic-institutional setup”, SSRN Electronic Journal, No. 81 ISSN 2282-8168. doi: 10.2139/ssrn.3613305.

Caner, A. and Wolff, E. (2004), “Asset poverty in the United States, 1984-99: evidence from the panel study of income dynamics”, Review of Income and Wealth, Vol. 50 No. 4, pp. 493-518, doi: 10.1111/j.0034-6586.2004.00137.x.

Cantor, G., Landry, S. and August (2020), “How are the most vulnerable households navigating the financial impact of COVID-19?”, Prosperity Now, available at: (accessed 28 September 2022).

Cao Alvira, J., Novoa Hoyos, A. and Núñez Torres, A. (2020), “On the financial literacy, indebtedness, and wealth of Colombian households”, Review of Development Economics, Vol. 25 No. 2, pp. 978-993, doi: 10.1111/rode.12739.

Chieffe, N. and Rakes, G. (1999), “An integrated model for financial planning”, Financial Services Review, Vol. 8 No. 4, pp. 261-268, doi: 10.1016/s1057-0810(00)00044-5.

Consumer Financial Protection Bureau (2015), “Measuring financial well-being. A guide to using the CFPB Financial Well-Being Scale”, available at: (accessed 28 September 2022).

Consumer Financial Protection Bureau (2017), “CFPB financial well-being scale”, Scale Development Technical Report, available at: (accessed 28 September 2022).

Cordero, J. and Pedraja, F. (2018), “La educación financiera en el contexto internacional”, Cuadernos Económicos de ICE, Vol. 95, pp. 239-257, doi: 10.32796/cice.2018.95.6649.

DANE (2021), “Indicadores económicos”, available at: (accessed 28 September 2022).

Fadzli Sabri, M. and Falahati, L. (2013), “Predictors of financial well-being among Malaysian employees: examining the mediate effect of financial stress”, Journal of Emerging Economies and Islamic Research, Vol. 1 No. 3, p. 61, doi: 10.24191/jeeir.v1i3.9130.

Fisch, J., Lusardi, A. and Hasler, A. (2019), “Defined contribution plans and the challenge of financial illiteracy”, SSRN Electronic Journal. doi: 10.2139/ssrn.3384778.

Fox, J. and Bartholomae, S. (2020), “Household finances, financial planning, and COVID‐19”, Financial Planning Review, Vol. 3 No. 4, doi: 10.1002/cfp2.1103.

García, N. (2012), “El impacto de la educación económica y financiera en los jóvenes: el caso de Finanzas para el Cambio”, Borradores de Economía, Banco de la República, Vol. 687, pp. 1-48, doi: 10.32468/be.687.

García Bohórquez, N. and Castro, F. (2010), “RE No. 137 Octubre. La educación económica y financiera en los bancos centrales de América Latina, Biblioteca Virtual Miguel de Cervantes”, available at: (accessed 28 September 2022).

Garman, E. and Joo, S. (1998), “Personal financial wellness may be the missing factor in understanding and reducing worker absenteeism”, Personal Finances and Worker Productivity, Vol. 2 No. 2, pp. 172-182.

Giné, X., García, N. and Gómez-González, J. (2017), “Financial information in Colombia”, Policy Research Working Paper, World Bank, Vol. 7998, pp. 1-29.

Grace, J. (2008), “Structural equation modeling for observational studies”, Journal of Wildlife Management, Vol. 72 No. 1, pp. 14-22, doi: 10.2193/2007-307.

Haveman, R. and Wolff, E. (2005), “The concept and measurement of asset poverty: levels, trends and composition for the U.S., 1983-2001”, The Journal of Economic Inequality, Vol. 2 No. 2, pp. 145-169, doi: 10.1007/s10888-005-4387-y.

Jöreskog, K.G. and Sörbom, D. (1982), “Recent developments in structural equation modeling”, Journal of Marketing Research, Vol. 19 No. 4, pp. 404-416.

Kurowski, Ł. (2021), “Household's over indebtedness during the COVID-19 crisis: the role of debt and financial literacy”, Risks, Vol. 9 No. 4, p. 62.

Leiva, J. and Brenes-Sánchez, R. (2018), “The influence of knowledge related to innovative performance”, Journal of Economics, Finance and Administrative Science, Vol. 23 No. 45, pp. 138-149.

Lusardi, A. (2015), “Financial literacy skills for the 21st century: evidence from PISA”, Journal of Consumer Affairs, Vol. 49 No. 3, pp. 639-659, doi: 10.1017/s1474747211000448.

Lusardi, A. and Mitchell, O. (2011), “Financial literacy around the world: an overview”, Journal of Pension Economics and Finance, Vol. 10 No. 4, pp. 497-508, doi: 10.1111/joca.12099.

Lusardi, A., Michaud, P. and Mitchell, O. (2017), “Optimal financial knowledge and wealth inequality”, Journal of Political Economy, Vol. 125 No. 2, pp. 431-477, doi: 10.1086/690950.

Lusardi, A., Hasler, A. and Yakoboski, P. (2020), “Building up financial literacy and financial resilience”, Mind and Society, Vol. 20 No. 2, pp. 181-187, doi: 10.1007/s11299-020-00246-0.

OECD (2014), PISA 2012 Results: Students and Money: Financial Literacy Skills for the 21st Century (Volume VI), PISA, OECD Publishing, Banco Mundial, No. 23692.

OECD (2016), “Financial education in europe: trends and recent developments”, available at:

Poh Lee, M. and Fadzli Sabri Lee, M. (2017), “Review of financial vulnerability studies”, Archives of Business Research, Vol. 5 No. 2, doi: 10.14738/abr.52.2784.

Rasool, N. and Ullah, S. (2020), “Financial literacy and behavioural biases of individual investors: empirical evidence of Pakistan stock exchange”, Journal of Economics, Finance and Administrative Science, Vol. 25 No. 50, pp. 261-278.

Reddy, R., Bruhn, M. and Tan, C. (2013), Capacidades financieras en Colombia: resultados de la encuesta nacional sobre comportamientos, actitudes y conocimientos financieros, Banco Mundial, pp. 1-122.

Valerio Roncagliolo, F. and Villamonte Blas, R. (2022), “Impact of financial stress in advanced and emerging economies”, Journal of Economics, Finance and Administrative Science, Vol. 27 No. 53, pp. 68-85, doi: 10.1108/JEFAS-05-2021-0063.

White, K., Park, N., Watkins, K., McCoy, M. and Thomas, M. (2019), “The relationship between financial knowledge, financial management, and financial self-efficacy among african-American students”, Financial Services Review, Vol. 29, pp. 169-185, doi: 10.2139/ssrn.3468751.

Yusof, A., Rokis, R. and Jusoh, W. (2015), “Financial fragility of urban households in Malaysia”, Jurnal Ekonomi Malaysia, Vol. 49 No. 1, pp. 15-24, doi: 10.17576/jem-2015-4901-02.




How to Cite

Cardona-Montoya, R. A., Cruz, V., & Mongrut, S. A. (2022). Financial fragility and financial stress during the COVID-19 crisis: evidence from Colombian households. Journal of Economics, Finance and Administrative Science, 27(54), 376–393. Retrieved from