The Influence Of Financial Behavior On Investment Decisions With Financial Literacy As A Mediation Variable: Case Study In PKN STAN Learning Assignment Students

Agung Dinarjito

doi:10.31092/jpkn.v5i1.2281

Authors

Agung Dinarjito Politeknik Keuangan Negara STAN

DOI:

https://doi.org/10.31092/jpkn.v5i1.2281

Keywords:

Financial behavior, Financial literacy, Investment decision, Loss aversion, Risk perception

Abstract

Making investment decisions is very important for investors because it will affect profits or losses. Various factors have influenced investment decisions, one of which is financial behavior. Study assignment students are employees who get the opportunity to continue their study. Because they already earn income, it is important to see the students' understanding regarding decision making. This study aims to see the influence of the financial behavior of study assignment students at the STAN State Finance Polytechnic in making decisions with financial literacy as an intervening variable. The financial behavior measured is overconfidence, herding, loss aversion, and risk perception. The result is only the financial literacy variable, risk perception, has a significant effect on investment decisions. Regarding the financial literacy variable, it is evident that only the overconfidence and risk perception variables influence it. Regarding the existence of financial literacy as an intervening variable, it is proven only by overconfidence and risk perception which are able to provide an indirect relationship to investment decisions. Financial literacy has succeeded in fully mediating the relationship of overconfidence to investment decisions and for risk perception only as partially mediation.

References

Abdin, S. Z. ul, Farooq, O., Sultana, N., & Farooq, M. (2017). The impact of heuristics on investment decision and performance: Exploring multiple mediation mechanisms. Research in International Business and Finance, 42, 674–688. https://doi.org/10.1016/j.ribaf.2017.07.010

Addinpujoartanto, N.A., & Darmawan, S. (2020). The Influence of Overconfidence, Regret Aversion, Loss Aversion, and Herding Bias on Investment Decisions in Indonesia.Journal of Economics and Business Research, 13(3), 175. https://doi.org/10.26623/jreb.v13i3.2863

Adiputra, I. G., Rahardjo, T. H., & Hadrian. (2021).Analysis of Investment Decision Making Through Overconfidence, Herding Effect, and Self-Monitoring Variable During the Covid-19 Pandemic in Indonesia. https://doi.org/10.2991/aebmr.k.210507.028

Alquraan, T., Alqisie, A., & al Shorafa, A. (2016). Do Behavioral Finance Factors Influence Stock Investment Decisions of Individual Investors? (Evidences from Saudi Stock Market). American International Journal of Contemporary Research, 6(3), 159–160.

Andansari, P. I. (2018). The Influence of Financial Attitude and Social Environment on Student Financial Literacy.Ecpdunamika Journal, 1(1).

Arieqat, A. Y., Rumman, A. A., Al-Alani, Y. S., & Alhorani, A. (2019). Impact Of Behavioral Finance On Stock Investment Decisions Applied Study On A Sample Of Investors At Amman Stock Exchange. Academy of Accounting and Financial Studies Journal, 23(2).

Bakar, S., & Yi, A. N. C. (2016). The Impact of Psychological Factors on Investors’ Decision Making in Malaysian Stock Market: A Case of Klang Valley and Pahang. Procedia Economics and Finance, 35, 319–328. https://doi.org/10.1016/S2212-5671(16)00040-X

Baker, H. K., & Nofsinger, J. R. (2002). Psychological Biases of Investors. Financial Services Review, 11, 97.

Chadra, A., & Kumar, R. (2008). Decision Making in the Stock Market: Incorporating Psychology with Finance. In the Proceedings of the Conference on Forecasting Financial Markets.

Dittrich, D. A. v., Güth, W., & Maciejovsky, B. (2005). Overconfidence in investment decisions: An experimental approach. The European Journal of Finance, 11(6), 471–491. https://doi.org/10.1080/1351847042000255643

Edward, T. (2010).Portfolio and Investment (1st ed.). Canisius.

Forlani, D., & Mullins, J. W. (2000). Perceived risks and choices in entrepreneurs’ new venture decisions. Journal of Business Venturing, 15(4), 305–322. https://doi.org/10.1016/S0883-9026(98)00017-2

Hariyanto. (2021, August 24).Loss Aversion in Investments? Here's How to Avoid It! Ajaib.Co.Id. https://ajaib.co.id/loss-aversion-dalam-investasi-begini-cara-menghindarinya/#Cara_Menghindari_Loss_Aversion

Hesniati, & Hendy. (2021). Effect of Financial Behavior on Investment Decisions.CoMBInES: Conference on Management, Business, Innovation, Education and Social Science, 1(1), 2221–2230.

Hidayat, W.W. (2019).Basic Concepts of Investment and Capital Markets (First). Uwais Indonesian Inspiration.

Huston, S. J. (2010). Measuring Financial Literacy. Journal of Consumer Affairs, 44(2), 296–316. https://doi.org/10.1111/j.1745-6606.2010.01170.x

Jahanzeb, A., Muneer, S., & Rehman, S.-U. (2012). Implication of Behavioral Finance in Investment Decision-making Process. Information Management and Business Review, 4(10), 532–536.

Kahneman, D., & Tversky, A. (1982). The Psychology of Preferences. Scientific American, 246(1), 160–173. http://www.jstor.org/stable/24966506

Kandpal, V., & Mehrotra, R. (2018). Role of Behavioral Finance in Investment Decision – A Study of Investment Behavior in India. International Journal of Management Studies, IN(4(6)), 39. https://doi.org/10.18843/ijms/v5i4(6)/06

Keswani, S., Dhingra, V., & Wadhwa, B. (2019). Impact of Behavioral Factors in Making Investment Decisions and Performance: Study on Investors of National Stock Exchange. International Journal of Economics and Finance, 11(8), 80. https://doi.org/10.5539/ijef.v11n8p80

Kourtidis, D., Ševi?, Ž., & Chatzoglou, P. (2011). Investors’ trading activity: A behavioural perspective and empirical results. The Journal of Socio-Economics, 40(5), 548–557. https://doi.org/10.1016/j.socec.2011.04.008

Lathifatunnisa, & Nur Wahyuni, A. (2021). The Effect of Demographic Factors, Risk Tolerance and Overconfidence on Student Investment Decision Making in Pekalongan City.Journal of Applied Business, 5(2), 203–216. https://doi.org/10.24123/jbt.v5i2.4688

Lintner, G. (1998). Why Investors Make Bad Decisions. The Planner, 8.

Lowies, G. A., Hall, J. H., & Cloete, C. E. (2016). Heuristic-driven bias in property investment decision-making in South Africa. Journal of Property Investment & Finance, 34(1), 51–67. https://doi.org/10.1108/JPIF-08-2014-0055

Malik, A. (2021, October 8). How to Understand Investor Risk Profile, Which Type Are You? Bareksa.Com. https://www.bareksa.com/berita/belajar-investasi/2021-10-08/cara-memahami-profil-risiko-investor-kamu-termasuk-tipe-mana

March, J. G., & Shapira, Z. (1987). Managerial Perspectives on Risk and Risk Taking. Management Science, 33(11), 1404–1418. https://doi.org/10.1287/mnsc.33.11.1404

Markowitz, H. (1952). Portfolio Selection*. The Journal of Finance, 7(1), 77–91. https://doi.org/10.1111/j.1540-6261.1952.tb01525.x

Metawa, N., Hassan, M. K., Metawa, S., & Safa, M. F. (2019). Impact of behavioral factors on investors’ financial decisions: case of the Egyptian stock market. International Journal of Islamic and Middle Eastern Finance and Management, 12(1), 30–55. https://doi.org/10.1108/IMEFM-12-2017-0333

Mumaraki, J. N., & Nasieku, T. (2016). Effect of overconfidence on individual investment decision?: Evidence from the investment services sector in Kenya. The International Journal of Business and Management, 4(10), 254–261.

Nababan, D., & Sadalia, I. (2013). Personal Financial Literacy Analysis and Financial Behavior of Undergraduate Students, Faculty of Economics, University of North Sumatra.Management Information Media, 1(1).

Nofsinger, J. (2001).Investment Madness: How Psychology Affects Your Investing and What to Do About It. Prentice Hall.

Novianto, J., & Robin. (2021). Investor’s Behavior and Stock Investment Decision in Batam City. ACCOUNTABLE, 18(3), 532–542.

Nur Aini, N. S., & Lutfi, L. (2019). The influence of risk perception, risk tolerance, overconfidence, and loss aversion towards investment decision making. Journal of Economics, Business & Accountancy Ventura, 21(3), 401. https://doi.org/10.14414/jebav.v21i3.1663

Olsen, R. A. (1998). Behavioral Finance and Its Implications for Stock-Price Volatility. Financial Analysts Journal, 54(2), 10–18. http://www.jstor.org/stable/4480062

Pandey, R., & Jessica, V. M. (2018). Measuring behavioural biases affecting real estate investment decisions in India: using IRT. International Journal of Housing Markets and Analysis, 11(4), 648–668. https://doi.org/10.1108/IJHMA-12-2017-0103

Pertiwi, T. K., Yuniningsih, Y., & Anwar, M. (2019). The biased factors of investor’s behavior in stock exchange trading. Management Science Letters, 835–842. https://doi.org/10.5267/j.msl.2019.3.005

Rahmayanti, W., Sri Nuryani, H., & Salam, A. (2019). The Effect Of Financial Attitude And Financial Behavior On Financial Literacy. .Journal of Management and Business, 2(1). https://doi.org/10.37673/jmb.v2i1.267

Rajeshwaran, N. (2020). The Impact of Behavioural Factors on Investment Decision Making and Performance of CSE Investors in Eastern Province of Sri Lanka. Sri Lanka Journal of Economic Research, 8(1), 27. https://doi.org/10.4038/sljer.v8i1.123

Ratnadi, N. M. D., Widanaputra, A. A. G. P., & Putra, I. N. W. A. (2020). Behavioral Factors Influencing Investment Decision-Making By College Student: An Empirical Study In Bali Province, Indonesia. International Journal of Scientific & Technology Research, 9(2), 1358–1368.

Ricciardi, V. (2007). A Literature Review of Risk Perception Studies in Behavioral Finance: The Emerging Issues. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.988342

Ritter, J. R. (2003). Behavioral finance. Pacific-Basin Finance Journal, 11(4), 429–437. https://doi.org/10.1016/S0927-538X(03)00048-9

Sashikala, V., & Chitramani, P. (2018). The Impact of Behavioural Factors on Investment Intention of Equity Investors. Asian Journal of Management, 9(1), 183. https://doi.org/10.5958/2321-5763.2018.00028.8

Seraj, A. H. A., Alzain, E., & Alshebami, A. S. (2022). The roles of financial literacy and overconfidence in investment decisions in Saudi Arabia. Frontiers in Psychology, 13.

Servon, L. J., & Kaestner, R. (2008). Consumer Financial Literacy and the Impact of Online Banking on the Financial Behavior of Lower-Income Bank Customers. Journal of Consumer Affairs, 42(2), 271–305. https://doi.org/10.1111/j.1745-6606.2008.00108.x

Sewell, W. (2005). Logics of History: Social Theory and Social Transformation. The University of Chicago Press.

Shah, S. Z. A., Ahmad, M., & Mahmood, F. (2018). Heuristic biases in investment decision-making and perceived market efficiency. Qualitative Research in Financial Markets, 10(1), 85–110. https://doi.org/10.1108/QRFM-04-2017-0033

Sindhu, R., Jandail, R. R. S., & Kumar, R. R. (2014). A novel approach for sentiment analysis and opinion mining. International Journal of Emerging Technology and Advanced Engineering, 4(4), 522–527.

Siraji, M. (2019). Heuristics Bias and Investment Performance: Does Age Matter? Evidence from Colombo Stock Exchange. Asian Journal of Economics, Business and Accounting, 1–14. https://doi.org/10.9734/ajeba/2019/v12i430156

Siregar, D. K., & Anggraeni, D. R. (2022). The Influence of Financial Literacy and Financial Behavior on Student Investment Decisions.Bussman Journal?: Indonesian Journal of Business and Management, 2(1), 96–112.

Slovic, P. (1972). Psychological Study of Human Judgment: Implications for Investment Decision Making. The Journal of Finance, 27(4), 779. https://doi.org/10.2307/2978668

Subramaniam, A., & Velnampy, T. (2017). The Role of Behavioural Factors in the Investment Decisions of Household Investors. International Journal of Accounting and Financial Reporting, 7(1), 392. https://doi.org/10.5296/ijafr.v7i1.11421

Susanti, S. (2017). w,4(1), 5. https://doi.org/10.26740/jepk.v4n1.p5-17

Tamimi, N., & Sebastianelli, R. (2017). Transparency among S&P 500 companies: an analysis of ESG disclosure scores. Management Decision, 55(8), 1660–1680. https://doi.org/10.1108/MD-01-2017-0018

Titman, S., Keown, A. J., & Martin, J. D. (2018). Financial Management: Principles and Applications (13th ed.). Pearson.

Ton, H. T. H., & Dao, T. K. (2014). The Effects of Psychology on Individual Investors’ Behaviors: Evidence from the Vietnam Stock Exchange. Journal of Management and Sustainability, 4(3). https://doi.org/10.5539/jms.v4n3p125

Upadana, I. W. Y. A., & Herawati, N. T. (2020). The Effect of Financial Literacy and Financial Behavior on Student Investment Decisions.Scientific Journal of Accounting and Humanics, 10(2), 126. https://doi.org/10.23887/jiah.v10i2.25574

Yolanda, Y., & Tasman, A. (2020). The Influence of Financial Literacy and Risk Perception on Investment Decisions of the Millennial Generation in Padang City.EcoGen, 3(1), 144–154.

Yosra Mefteh Rekik, Y. M. R. (2013). Determinants of Individual Investors’ Behaviors: Evidence from Tunisian Stock Market. IOSR Journal of Business and Management, 8(2), 109–119. https://doi.org/10.9790/487X-082109119