COVID-19 PSYCHOLOGY AND FINANCIAL BEHAVIOUR: THE URBAN MIDDLE CLASS IN BANGLADESH

Abstract

The analysis, using an online survey, captures the adjustments in economic behaviour and changes in the choice of financial instruments by the urban middle class in Bangladesh due to Covid-19 pandemic. It shows that 43 per cent of the surveyed households suffered income losses—57 per cent belonging to lower middle class (LMC) and 19 per cent to upper middle class (UMC) households. Nearly one-third of the LMC households reduced their food costs compared with 6 per cent of the UMC households. The pandemic has also initiated large scale changes in their financial behaviour more towards digital and online markets with nearly twothirds reporting high reliance on online purchases. The observed changes indicate a long term transformation in the financial behaviour of the middle class households. Complementary evidence highlights the need for reducing their vulnerability since rising expectations of the expanding middle class are the critical drivers of social change in Bangladesh. The key to such dynamic transformations is the creation of a more learning middle class—a dynamic middle class that would be ready to exploit the opportunities of the ‘new normal’ after the Covid-19 pandemic.