THE INFLUENCE OF FINANCIAL LITERACY AND BEHAVIORAL BIASES ON GENERATION Z INVESTMENT DECISION MAKING IN THE STOCK MARKET

• Main Author: Abram Prasetyo, Antonius
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/66781
• Institution: Institut Teknologi Bandung

The number of Generation Z investors in the Indonesian stock market is rapidly growing with the Single Investor Identification (SID) growth of investors between 18- 25 years old increased by 181.01% from 2016 to 2019. The increased trendline of Single Investor Identification (SID) affected the volume and transaction frequency in the stock market as the performance increased by 43.06%. However, the level of financial literacy in the investment sector, especially the capital market is only 4.92% of the total respondents. Furthermore, investors' behavior may be affected by their behavioral biases that contradicts to Efficient Market Hypothesis. Many biases may influence the investment decision-making of an investor like Overconfidence Bias, Availability Bias, Familiarity Bias, Illusion of Control, and Bandwagon Effect. Therefore, this research aimed to know the impact of financial literacy and behavioral biases on Generation Z stock market investment decisions in Indonesia and assess which factors have the most important role for Generation Z in making an investment decision. The data in this research was gathered using quantitative methods with 400 respondents of Generation Z investors in Indonesia. The data was then further processed using Multiple Linear Regression including t-test and F-test with SPSS tools. The research shows that Financial Literacy, Overconfidence Bias, Availability Bias, Familiarity Bias, Illusion of Control, and Bandwagon Effect affected Generation Z investment decisions in Indonesia with significant level below 0.05. Furthermore, the research also shows that although financial literacy has a significant impact on Generation Z’s investment decisions, it is least significance than behavioral biases. Keywords : Generation Z, Investment Decision, Behavioral Bias, Financial Literacy, Overconfidence Bias, Availability Bias, Familiarity Bias, Illusion of Control, Bandwagon Effect, Multiple Linear Regression