Investment Interest and Consumptive Behaviour of Student Investors: Between Rationality and Irrationality

Apriani Dorkas Rambu Atahau,Jandi Elriko Umboh

doi:10.15294/jdm.v10i1.16837

Abstract

The purpose of this study is to examine the tendency to invest and consume among student in North Sulawesi. Phenomenon in North Sulawesi province showed an increase in the number of stock investors dominated by young investors (university students). In making investment decision, they often act in irrational way (herding behavior). In contrast, other phenomena demonstrated a consumptive behavior of those young investors which contradict with investment interests. Populations of this research are 3468 student investors at Indonesia stock Exchange Investment Gallery in the North Sulawesi province. Using accidental sampling, the sample selected is 250 student investors. The analytical technique used is Covariance Based Structural Equation Modeling (CB-SEM). The results showed that investment interest mediate the effect of herding behavior on consumptive behavior. It implies the need to educate student investors on the importance of minimizing the consumptive behavior

Highlights

Financial literacy is the knowledge and ability to manage finances to improve welfare (Akmal & Saputra, 2016) which includes knowledge of investment, saving, and consumption (Ariadi et al, 2015)
The increasing number of student investors is inseparable from the breakthroughs made by the Financial Services Authority (FSA) province of North Sulawesi, Gorontalo, and North Moluccas; those are market deepening strategies and strengthening infrastructure, as well as the hard work of Representative Office of Indonesia Stock Exchange (ISE) in Manado which actively provides stock market education and establishes Investment Galleries in various universities in North Sulawesi province
Based on the conclusions that have been described, the information that can be given to related institutions, namely FSA, Indonesia Stock Exchange (IDX), and universities in North Sulawesi province, that conditions occur in the increasing number of student investors in North Sulawesi province has irrational behavior and consumptive behavior

Summary

Introduction

Financial literacy is the knowledge and ability to manage finances to improve welfare (Akmal & Saputra, 2016) which includes knowledge of investment, saving, and consumption (Ariadi et al, 2015). Financial literacy in stock investment becomes an interesting phenomenon for some university students in North Sulawesi province. This is indicated by the gaining number of stock investors in North Sulawesi province in 2014 with 2,700 investors with a percentage 60.91%, while in the previous year only 1,678 investors (market.bisnis.com). This number continues to gain up to November 2016 there were 3,468 which were dominated by beginners, especially university students The increasing number of student investors is inseparable from the breakthroughs made by the Financial Services Authority (FSA) province of North Sulawesi, Gorontalo, and North Moluccas; those are market deepening strategies and strengthening infrastructure, as well as the hard work of Representative Office of Indonesia Stock Exchange (ISE) in Manado which actively provides stock market education and establishes Investment Galleries in various universities in North Sulawesi province

Objectives

Results

Conclusion