Abstract
It has been nine years since the Indonesia Stock Exchange established a Syariah Online Trading System (SOTS), but the number of investors using this system is still relatively small compared to the regular investor. Moreover, the number is much smaller than the potential number of sharia financial markets. This study aims to describe Muslim investors' behavior in Indonesia who use the regular stock account instead of the sharia account. We surveyed by using both offline and online questionnaires, whereby the investors ask to compose the imaginary stock portfolios consisting of stocks and their weights. Using a convenience sampling method, we succeeded in interviewing 85 respondents spread across Indonesia. This study shows that the risk appetite of Indonesian Muslim investors is risk-averse, and they consider sharia aspects in their investment decision. Nonetheless, the compliance to sharia varies among them. Hence, Indonesian Muslim investors cannot be seen and treat as a homogenous group. JEL Classification: G12, G15, G33How to Cite:Firmansyah, E. A., & Andanawari, N. (2020). Risk Appetite and Investment Behavior: A Study on Indonesia Muslim Investors. Etikonomi: Jurnal Ekonomi, 19(2), xx – xx. https://doi.org/10.15408/etk.v19i2.16062.
Highlights
Muslims believe that Islam does regulate the relationship between them with God and encompasses the teaching to apply sharia (Islamic laws) in all aspects of life (Siddiqui, 1994)
To further investigate the consideration of the sharia aspect in an investment decision, we identified the percentage of funds allocated in both sharia and non-sharia aspects by our respondents
We found that not all Muslim investors in Indonesia consider sharia compliance an essential variable in their investment decisions
Summary
Muslims believe that Islam does regulate the relationship between them with God and encompasses the teaching to apply sharia (Islamic laws) in all aspects of life (Siddiqui, 1994). According to the State of Global Islamic Economy Report in 2018-2019, as reported by the Indonesian Ministry of National Development Planning (Bappenas, 2019), Muslim populations reached 1.84 billion people worldwide, and approximately 3 trillion U.S dollars estimate to be spent in the sharia-compliant spending or consumption by all Muslims by 2023. Sharia-compliant investment is an investment in instruments, such as stocks, which follow Islamic rules. For a stock to be sharia-compliant, it has to follow both qualitative and quantitative criteria set by the government of a particular jurisdiction. Several previous studies have discussed the research on stock screening (Abdul Rahman et al, 2010; Bellalah et al, 2013; Derigs & Marzban, 2008; Ho, 2015; Htay, Abedeen, & Salman, 2013; Ibrahim, 2015)
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