THE EFFECT OF FINANCIAL LITERACY AND DIGITAL PLATFORM LITERACY ON THE RESIDENTIAL PROPERTY INVESTMENT DECISIONSÂ ANDÂ OWNERSHIP

• Main Author: Zidane, Chairil
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/79524
• Institution: Institut Teknologi Bandung

Asset-building and wealth accumulation for residential property assets play an important role in improving the households’ quality and standard of living, in line with the growth of the residential property price index over time and the shift in the meaning of housing as an investment asset in Indonesia. Asset-building for residential property assets through investment decision-making to avoid welfare loss in retirement coupled with the complexity of mortgage demands sufficient financial literacy. The rapid increase in the use and access of marketplace platforms to residential property investment and ownership also requires users to acquire digital platform competence or literacy. Therefore, this study aims to examine the effect of financial literacy and digital platform literacy on residential property investment decisions and ownership. This study uses an exam-type questionnaire instrument design to measure the level of literacy which contains a set of questions for comprehension and competency in five areas of financial literacy and five areas of digital platform literacy (1) along with observing participation in residential property investment and ownership, which distributed to 401 respondents of working age from 18 major cities in Indonesia. Collected questionnaires were then analyzed descriptively and inferentially using Binary and Ordinal types of Logistic and Probit models. The econometric model is interpreted to understand the effect of socio-demographic and socio-economic characteristics on individual financial literacy level and digital platform literacy level (2), and understand the effect of levels (model I) and areas (model II) of financial literacy and digital platform literacy, as well as individual characteristics, on investment intention and motivation and financial planning prioritization, willingness to pay, and ownership of residential property. The findings and analysis of this study show that the sample is still very low in financial literacy and low in digital platform literacy (1). In this study, the level of financial literacy was significantly affected by socio-demographic and socio- economic factors such as gender, education, and financial-based program, but there was no significant effect on digital platform literacy (2). The individual decision to invest in residential property, driven by the intention and motivation to invest in more than one asset and prioritization of financial planning, is affected by financial literacy level and understanding of inflation, interest rates in the mortgage period, and risk diversification, digital platform literacy level and digital platform easefulness, digital skill, digital ethic, and digital culture, as well as financial-based program and income (3.1). Individual willingness to pay for residential property investment and ownership is affected by financial literacy level and understanding of interest rates, digital platform literacy level and digital ethic, as well as age, financial-based program, and income (3.2). Furthermore, residential property ownership is affected by financial literacy level and understanding of interest rates, digital platform literacy and digital skill, as well as age, marital status, education, and income (3.3). This study found a paradox in investment decisions and residential property ownership, in other words, the effect between financial literacy and digital platform literacy tends to be inversely proportional, where the level and most areas of financial literacy negatively affect while the level and most areas of digital platform literacy positively affect the probability of residential property investment and ownership. This study observes the effect of digital platform literacy which is built from the digital literacy conceptual framework and the effect of each area of digital platform literacy along with each area of financial literacy, on individual willingness to allocate their monthly income for residential property expenditure which has not yet discussed in previous studies on similar topics. This study also contributes to the literature on the effect of financial literacy and digital platform literacy on residential property investment decisions and ownership in the context of developing countries, particularly in Indonesia. Apart from that, this study finds that financial literacy, at least in the case of Indonesia, might reduce the tendency to over-invest only in residential property assets potentially increasing the housing demand and property bubble in the market. Hence this study is expected to provide new insights and considerations for the government and relevant stakeholders to intervene in the financial literacy status and digital platform literacy status through literacy mainstreaming programs in addition to implementation of the residential property financing policies such as mortgages adjustment by the monthly income that the homeowner is willing to allocate, in order to increase opportunities in asset- building for residential property assets for holistic urban community development