FROM FINANCIAL SELF-EFFICACY TO DEFI ADOPTION INTENTION: THE MEDIATING ROLE OF PERCEIVED FINANCIAL CAPABILITY

Abstract

Based on Social Cognitive Theory and financial capability viewpoints, this research explores the link amid financial self-efficacy (FSE) and the intention to use decentralized finance (DeFi) and explores if perceived financial capability (PFC) has as a mediating role amid FSE and the intention to use DeFi. A quantitative survey design with a single method was used and data were gathered from 387 users of cryptocurrency in Pakistan between the ages of 22, who have used, explored, or seriously considered using any DeFi application or service. The hypothesized direct and indirect relationships were tested by regression analysis and Hayes’s PROCESS macro in SPSS. The results revealed a positive connection amid financial self-efficacy and intent to adopt DeFi, and perceived financial capability is a noteworthy mediator in this association. The mediation is partial, suggesting that financial self-efficacy impacts the intention to adopt DeFi both directly and via perceived financial capability. The research augments the increasing literature on DeFi-adoption by introducing the concept of an individual-level financial psychological mechanism, and extends financial capability research to the decentralized digital finance sector. The results offer implications for DeFi service providers, policy makers and regulators looking to promote responsible and informed engagement with new digital financial services, as well as for financial education providers.