Presenting a Structural Model of the Effect of Personality Traits on Financial Capability with the Moderating Role of Ideology

Zahra  Shafati; Mohammad Hamed Khanmohammadi; Shohre  Yazdani; Tahereh  Mahmoudiyan Dastnaee

Authors

Zahra Shafati Department of Accounting, Dam.C., Islamic Azad University, Damavand, Iran https://orcid.org/0009-0004-1863-6709
Mohammad Hamed Khanmohammadi Department of Accounting, Dam.C., Islamic Azad University, Damavand, Iran https://orcid.org/0000-0002-4944-0862
Shohre Yazdani Department of Accounting, Dam.C., Islamic Azad University, Damavand, Iran Author https://orcid.org/0000-0002-9720-6915
Tahereh Mahmoudiyan Dastnaee Department of Psychology, Beh.C., Islamic Azad University, Behshahr, Iran Author https://orcid.org/0000-0001-6020-3422

Keywords:

financial capability, personality traits, ideology, demographics

Abstract

Financial capability is one of the fundamental factors contributing to individuals’ economic well-being and appropriate financial decision-making, while psychological and individual factors play an essential role in explaining financial behaviors and capabilities. Accordingly, the present study aimed to develop a structural model of the effect of personality traits on financial capability, considering the moderating role of ideology. Personality traits were examined based on the Big Five personality model, including extraversion, neuroticism, agreeableness, conscientiousness, and openness to experience. Age, gender, income, education, and employment status were also considered control variables. In terms of purpose, this research was applied, and in terms of method, it employed a descriptive-survey design. The required data were collected using standardized questionnaires, and 839 usable questionnaires were analyzed. SPSS was used to examine demographic characteristics and control variables, whereas SmartPLS was employed to test the measurement model, the structural model, and the moderating role of ideology. The findings demonstrated that personality traits played a positive and statistically significant role in explaining individuals’ financial capability. Extraversion, agreeableness, conscientiousness, and openness to experience increased individuals’ financial capability, whereas neuroticism reduced it. Overall, ideology reduced the strength of the relationship between personality traits and financial capability. More specifically, ideology strengthened the relationships of extraversion, agreeableness, and openness to experience with financial capability, while weakening the relationships of neuroticism and conscientiousness with financial capability. The results of this study may be used to design financial literacy and financial capability enhancement programs, formulate educational policies, and develop strategies tailored to individuals’ personal and attitudinal characteristics.

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