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How Millennials Make Investment Decisions: Financial Literacy and Financial Behavior

Author

Listed:
  • Dewi Tamara

    (Binus Business School Master Program, Bina Nusantara University, Jakarta, Indonesia)

  • Anita Maharani

    (Binus Business School Master Program, Bina Nusantara University, Jakarta, Indonesia)

Abstract

This study investigates the effect of financial literacy, financial attitude, risk perception, and financial behavior on investment decisions. Employing a survey method with 342 respondents in Jakarta, the findings reveal that financial literacy has a negative and insignificant effect on investment decisions. In contrast, risk perception plays a crucial role in influencing investment decisions. Furthermore, financial behavior has an indirect mediating effect between financial literacy and risk perception on investment decisions but does not affect financial attitude. This study concludes that risk perception and financial behavior are important factors in investment decisions. Future research may consider incorporating other variables such as herding behavior or overconfidence.

Suggested Citation

  • Dewi Tamara & Anita Maharani, 2024. "How Millennials Make Investment Decisions: Financial Literacy and Financial Behavior," Economics and Finance in Indonesia, Faculty of Economics and Business, University of Indonesia, vol. 70, pages 132-146, December.
    • Handle: RePEc:lpe:efijnl:202409
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    More about this item

    Keywords

    investment decisions; financial literacy; financial attitude; risk perception; financial behavior;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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