THE PSYCHOLOGICAL AND EDUCATIONAL DRIVERS OF INVESTMENT DECISIONS: A STUDY ON GEN Y AND GEN Z IN BATAM CITY
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Dewi Khornida Marheni(1*)
Department of Management, Faculty of Business and Management, Universitas Internasional Batam
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Serina Serina(2)
Department of Management, Faculty of Business and Management, Universitas Internasional Batam
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Hanini Ilyana Che Hashim(3)
Department of Accounting and Finance, Faculty of Management, Universiti Teknologi Malaysia
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Arienda Gitty Ramadani(4)
Department of Management, Faculty of Business and Management, Universitas Internasional Batam
(*) Corresponding Author
Keywords:
Financial Literacy, Herding, Investment Decision, Overconfidence
Abstract
The primary purpose of this research is to thoroughly analyze the influence of overconfidence and herding behavior on stock investment decisions. Additionally, this research aims to investigate the moderating effect of financial literacy on the relationship between these behavioral factors (overconfidence and herding) and investment decisions. This research is quantitative research. The sample of this research is Gen Y and Gen Z stock investors in Batam City, Indonesia. The research analyzed the data using Partial Least Square Structural Equation Model (PLS-SEM), an advanced statistical technique that allows examining complicated relationships among observed variables and latent variables. The findings have revealed that overconfidence has a significant positive effect on investment. Similarly, herding significantly positively affects investment decisions, while financial literacy successfully moderates the relationship between overconfidence and investment decisions; however, it does not successfully moderate the relationship between herding and investment decisions.
Keywords: Financial Literacy; Herding; Investment Decision; Overconfidence
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References
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https://doi.org/10.9734/ajeba/2023/v23i181056
Ramadani, A. G. (2022). Financial Behavior Sebagai Pemediasi Pengaruh Financial Literacy, Financial Experience Financial Self Efficacy Dan Risk Tolerance Terhadap Kepeutusan Investasi Saham Pada Investor Milenial Di Indonesia.
Ranaweera, S. S., & Kawshala, B. A. H. (2022). Influence of Behavioral Biases on Investment Decision Making with Moderating Role of Financial Literacy and Risk Attitude: A Study Based on Colombo Stock Exchange. In South Asian Journal of Finance (Vol. 2, Issue 1).
https://journals.kln.ac.lk/sajf/images/articles/vol2/i01/v02i01a04.pdf
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Soraya, R., Risman, A., & Siswanti, I. (2023). The Role of Risk Tolerance in Mediating the Effect of Overconfidence Bias, Representativeness Bias and Herding on Investment Decisions. Journal of Economics, Finance and Management Studies, 06(07). https://doi.org/10.47191/jefms/v6-i7-36
Tuominen, N. (2016). A Basic Theory of Rational Herd Behavior and Informational Cascades Does it apply to Financial Markets?
Tabassum, S., Ali Soomro, I., Ahmed, S., Khurram Khan Alwi, S., Hussain Siddiqui Scholar, I., & Hussain Siddiqui, I. (2021). Behavioral Factors Affecting Investment Decision-Making Behavior In A Moderating Role Of Financial Literacy: A Case Study Of Local Investors Of Pakistan Stock Market. International Journal of Management (IJM), 12(2), 321–354.
https://doi.org/10.34218/IJM.12.2.2021.035
Alaaraj, H., & Bakri, A. (2020). The Effect of Financial Literacy on Investment Decision Making in Southern Lebanon. International Business and Accounting Research Journal, 4(1).
Ansari, Y., Albarrak, M. S., Sherfudeen, N., & Aman, A. (2022). A Study of Financial Literacy of Investors—A Bibliometric Analysis. In International Journal of Financial Studies (Vol. 10, Issue 2). MDPI. https://doi.org/10.3390/ijfs10020036
Arik, S. N. L. K., & Sri, A. L. G. (2021). The Effect Of Overconfidence and Optimism Bias On Stock Investment Decisions With Financial Literature as Moderating Variable. Eurasia: Economics & Business,. https://doi.org/10.18551/econeurasia.2021-12
Chen, H., & Volpe, R. P. (1998). An analysis of personal financial literacy among college students. Financial Services Review, 7(2), 107–128.
https://doi.org/10.1016/s1057-0810(99)80006-7
Edwards, I. D. (1996). Prospect Theory: A Literature Review.
Fornell, C., & Larcker, D. F. (1981). Evaluating Structural Equation Models with Unobservable Variables and Measurement Error.
Halim, R., & Pamungkas, A. S. (2023). The Influence of Risk Perception, Overconfidence, and Herding Behavior on Investment Decision. International Journal of Application on Economics and Business, 1(1), 521–529. https://doi.org/10.24912/ijaeb.11.521-529
Hayat, A., & Anwar, M. (2016). Impact of Behavioral Biases on Investment Decision; Moderating Role of Financial Literacy.
https://ssrn.com/abstract=2842502Electroniccopyavailableat:https://ssrn.com/abstract=2842502Electroniccopyavailableat:https://ssrn.com/abstract=2842502
Hirdins, M. (2021). Does Herding Behaviour and Overconfidence Drive the Investor’s Decision Making During the Covid-19 Pandemic. Cognizance Journal of Multidisciplinary Studies, 1(8), 1–16.
https://doi.org/10.47760/cognizance.2021.v01i08.001
Iram, T., Bilal, A. R., & Ahmad, Z. (2023). Investigating The Mediating Role of Financial Literacy on The Relationship Between Women Entrepreneurs’ Behavioral Biases and Investment Decision Making. Gadjah Mada International Journal of Business, 25(1), 93–118. http://journal.ugm.ac.id/gamaijb
Khalid, R., Javed, M. U., & Shahzad, K. (2018). Impact of Behavioral Biases on Investment Decision Making with Moderating Role of Financial Literacy. In Jinnah Business Review (Vol. 6, Issue 2). http://www.jbrc.pk
Khan, I., Afeef, M., Sayaam, M. A., & Ullah, W. (2021). Behavioral factors influencing investment decisions of institutional investors: Evidence from asset management industry in Pakistan. Ilkogretim Online-Elementary Education Online, Year, 20(2), 603–614. https://doi.org/10.17051/ilkonline.2021.02.67
KSEI. (2023). Pasar Modal Reksa Dana Saham dan Surat Berharga Lainnya SBN Pertumbuhan Investor. https://doi.org/10.311.152
Kumar, S., & Goyal, N. (2015). Behavioural biases in investment decision making – a systematic literature review. Qualitative Research in Financial Markets, 7(1), 88–108. https://doi.org/10.1108/QRFM-07-2014-0022
Lestari, D. M., Sadalia, I., & Silalahi, A. S. (2023). The Effect of Financial Literacy, Risk Perception, Overconfidence, and Investment Experience on Cryptocurrency Investment Decision (pp. 158–164). https://doi.org/10.2991/978-94-6463-008-4_21
Madaan, G., & Singh, S. (2019). An analysis of behavioral biases in investment decision-making. International Journal of Financial Research, 10(4), 55–67. https://doi.org/10.5430/ijfr.v10n4p55
Marheni, D. K., Jenny, & Agustin, I. N. (2023). Cryptocurrency Decision Analysis as an Instrument in Modern Financial Markets Through Investment Intention. Jurnal Manajemen Dan Pemasaran Jasa, 16(2), 237–254. https://doi.org/10.25105/jmpj.v16i2.17476
Marheni, D. K., Ramadani, A. G., & Kelvin, K. (2024). Factors Affecting Saving Behavior of Generation Z in Batam City. New Applied Studies in Management, 7(2), 44–59. https://doi.org/10.22034/NASMEA.2024.183191
Mutiara, I., & Agustian, E. (2020). Pengaruh Financial Literacy dan Financial Behavior terhadap Keputusan Investasi pada Ibu-Ibu PKK Kota Jambi. J-MAS (Jurnal Manajemen Dan Sains), 5(2), 263. https://doi.org/10.33087/jmas.v5i2.193
Naomi, C., Kiprop, S., & Tanui, ; John. (2018). Influence of Herding Behavior on Investment Decision of SMEs in Bomet County, Kenya. East African Scholars Journal of Economics, Business and Management. www.easpublisher.com
Novianggie, V., & Asandimitra, N. (2019). The Influence of Behavioral Bias, Cognitive Bias, and Emotional Bias on Investment Decision for College Students with Financial Literacy as the Moderating Variable. International Journal of Academic Research in Accounting, Finance and Management Sciences, 9(2), 92–107. https://doi.org/10.6007/IJARAFMS/v9-i2/6044
Purwidianti, W., Rahmawati, I. Y., & Dwiyanti, R. (2023). Overconfidence and Herding Bias on Investment Decisions the Role of Risk Perception as a Mediator. Asian Journal of Economics, Business and Accounting, 23(18), 36–45.
https://doi.org/10.9734/ajeba/2023/v23i181056
Ramadani, A. G. (2022). Financial Behavior Sebagai Pemediasi Pengaruh Financial Literacy, Financial Experience Financial Self Efficacy Dan Risk Tolerance Terhadap Kepeutusan Investasi Saham Pada Investor Milenial Di Indonesia.
Ranaweera, S. S., & Kawshala, B. A. H. (2022). Influence of Behavioral Biases on Investment Decision Making with Moderating Role of Financial Literacy and Risk Attitude: A Study Based on Colombo Stock Exchange. In South Asian Journal of Finance (Vol. 2, Issue 1).
https://journals.kln.ac.lk/sajf/images/articles/vol2/i01/v02i01a04.pdf
Setiawan, C Y., Atahau, A. D. R., & Robiyantoen. (2018). Cognitive Dissonance Bias, Overconfidence Bias dan Herding Bias dalam Pengambilan Keputusan Investasi. In Saham. Accounting and Financial Review (Vol. 1, Issue 1). http://jurnal.unmer.ac.id/index.php/afre
Soraya, R., Risman, A., & Siswanti, I. (2023). The Role of Risk Tolerance in Mediating the Effect of Overconfidence Bias, Representativeness Bias and Herding on Investment Decisions. Journal of Economics, Finance and Management Studies, 06(07). https://doi.org/10.47191/jefms/v6-i7-36
Tuominen, N. (2016). A Basic Theory of Rational Herd Behavior and Informational Cascades Does it apply to Financial Markets?
Tabassum, S., Ali Soomro, I., Ahmed, S., Khurram Khan Alwi, S., Hussain Siddiqui Scholar, I., & Hussain Siddiqui, I. (2021). Behavioral Factors Affecting Investment Decision-Making Behavior In A Moderating Role Of Financial Literacy: A Case Study Of Local Investors Of Pakistan Stock Market. International Journal of Management (IJM), 12(2), 321–354.
https://doi.org/10.34218/IJM.12.2.2021.035
Published
2025-07-24
How to Cite
Marheni, D., Serina, S., Hashim, H., & Ramadani, A. (2025). THE PSYCHOLOGICAL AND EDUCATIONAL DRIVERS OF INVESTMENT DECISIONS: A STUDY ON GEN Y AND GEN Z IN BATAM CITY. Journal of Management : Small and Medium Enterprises (SMEs), 18(2), 1289-1302. https://doi.org/10.35508/jom.v18i2.20434
Section
Articles
