Understanding sources of financial well-being in Romania: a prerequisite for transformative financial services

Purpose The purpose of this paper is to investigate the extent to which financial behavior and financial well-being are affected by cognitive and non-cognitive factors in a specific Romanian post-communist context. This study shows that financial well-being is significantly linked to both financial education and to a set of non-cognitive factors. This paper offers strategic insights on what financial services should communicate to consumers and how they should be communicated, achieve the mutual benefits of the transformative paradigm. Design/methodology/approach This study uses an online sample of 1,602 participants, representative of the general population in Romania concerning income and education, to collect data on financial anxiety, financial security and financial saving behavior (dependent variables), self-control, optimism, future orientation, deliberative thinking and financial literacy (independent variables). This paper measures the latent constructs – as composite indices, using partial least squares – path modeling. Working with WarpPLS software version 6.0 allows exploration of both linear and non-linear relationships involved in the model, along with their practical and managerial implications. Findings The results indicate that the key component to address in the development of financial services (in the post-soviet context) is financial anxiety. This study finds that, in contrast to Western countries, in Central, Eastern and Southeastern Europe (CESEE), financial education is not always a panacea. Additionally, financial security is not always the most important goal for consumers. Practical implications This paper suggests managerial recommendations for redefining the relationship between banks and the Romanian population, focused mainly on diminishing financial anxiety and increasing financial security, as key elements of transformative financial services. Originality/value The study highlights the significant role played by behavioral variables in shaping financial well-being in Romania, being among the very few investigations illustrating the relevance of the topic in post-communist countries. This research shows unique challenges for the design of transformative financial services in a specific (post-communist) setting and provides insights on how financial services marketing can become more effective in the CESEE region.

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