Understanding Regional Differences in Financial Attitudes and Their Effects on Personal Financial Management Behavior: A MICOM Investigation

Abstract

This study investigates regional differences in financial attitudes and their effects on personal financial management behavior using the MICOM (Measurement Invariance of Composite Models) approach. Focusing on rural and urban regions of Punjab, data was collected from 570 respondents through a structured questionnaire employing a purposive sampling technique. The questionnaire assessed various dimensions of financial attitudes, including financial literacy, risk tolerance, future orientation, saving habits, budgeting practices, debt management, and investment behaviors. The MICOM approach was utilized to ensure measurement invariance between the rural and urban samples, followed by comparative and regression analyses to identify significant differences and key predictors of financial management behaviors. The findings reveal distinct regional variations in financial attitudes and behaviors, with urban respondents demonstrating higher levels of financial literacy and more proactive financial management practices compared to their rural counterparts. These results highlight the need for tailored financial education programs and policy interventions to address the specific needs of different regional populations. The study contributes to the broader discourse on financial behavior by providing empirical evidence on the influence of regional contexts on financial attitudes and management practices.