The Effect of Financial Literacy and Knowledge of Capital Market on Intention to Invest on Islamic Stock Exchange

Abstract

This study aims to find out the effect of financial literacy and knowledge capital market on intention to invest in Islamic stock exchange. Our study employed a quantitative method using survey techniques. Samples of this study were ninety-four students randomly selected from two departments of Islamic economy and banking within the Faculty of Islamic Economics and Business of State University of Islamic Studies Datokarama Palu, Indonesia. Our study found that financial literacy variables and knowledge of the capital market have a positive and significant effect on the students’ interest in the Islamic capital market. Financial literacy played a more dominant role compared to the knowledge on the capital market variable. Our study highlighted an important point is that attracting a new generation in the Islamic capital market requires more attention from government and education institutions to provide them with sufficient knowledge and literacy of capital market and financial. Future studies need to study a better way to provide the young generation with financial literacy and capital market knowledge.