The Correlation between Education Level and Understanding of Financial Literacy and its Effect on Investment Decisions in Capital Markets

Abstract

This study aims to describe how the educational level of investors influences their understanding of financial literacy and its effect on investment decision making in capital markets. The method used in this research is quantitative descriptive. Data collection was conducted from 7 January to 7 February 2020, by distributing questionnaires to investors who were members of PT Bursa Efek Indonesia. The sample in this study amounted to 108 investors. The research findings show that the level of investor knowledge regarding financial literacy is high. There is a significant correlation between the investor education level and their understanding of financial literacy, thus influencing investors in the financial decisions they make. It can be concluded that, for investment decision making in capital markets, knowledge of financial literacy is necessary. Therefore, to increase investor understanding of various levels of education on financial literacy in the capital market, education, and training on financial literacy as sustainable capital is required.