DIGITAL FINANCIAL LITERACY AND ITS IMPACT ON CONSUMER FINANCIAL BEHAVIOUR IN URBAN INDIA: A MODERATED MEDIATION MODEL

Digital financial literacy (DFL) has become a crucial enabler of informed financial decision-making in India’s
rapidly evolving fintech ecosystem. With the expansion of UPI, mobile wallets, digital lending, and app-based
investment platforms, consumer financial behavior has undergone significant transformation. However,
disparities persist in consumers’ ability to understand digital tools, evaluate financial risks, and apply secure
online practices. This 2025 study tests a moderated mediation model in which financial self-efficacy mediates
the effect of DFL on consumer financial behavior, while perceived digital trust moderates the self-efficacy–
behavior relationship.
Data were collected from 320 digital finance users across Delhi, Mumbai, Bengaluru, Chennai, and Hyderabad
between February and September 2025 using a structured questionnaire. Structural Equation Modelling and
PROCESS Macro (Model 7; 5,000 bootstraps) confirmed that DFL significantly improves responsible financial
behavior (β = 0.42, p < .001). Financial self-efficacy partially mediates this effect (indirect effect = 0.20; 95%
CI [0.12, 0.30]). Perceived digital trust significantly strengthens the self-efficacy → behavior link (interaction β
= 0.23, p = .002), producing a significant moderated mediation effect (index = 0.08; 95% CI [0.03, 0.15]).
The findings emphasize the joint role of literacy, confidence, and trust in driving positive digital financial
outcomes. Policy implications include targeted literacy programs, trust-enhancing fintech design, and
confidence-building interventions.
Keywords: Digital Financial Literacy, Financial Self-Efficacy, Consumer Financial Behavior, Digital Trust,
Moderated Mediation Model