Abstract
This study examines the effect of emotional intelligence, the locus of control, and risk aversion on intention to risky investment with financial literacy as moderating effect. This study uses 98 investors distributed by online questionnaire. Data examined using Partial Least Square (PLS) technique. The results show that the emotional intelligence, the locus of control have a positive effect and risk aversion and financial literacy have a negative effect on intention to a risky investment. However, there is no moderating effect of financial literacy on those direct effects. The implication for stakeholder and further research are discussed.
Highlights
Investments always include risk factors (Ehrhardt & Brigham, 2016)
Convergent validity is assessed by output from outer loading and Average Variance Extracted (AVE) (Abdillah & Hartono, 2015)
This research found that emotional intelligence and locus of control have a positive effect on digital risky investment intention, but risk aversion and financial literacy have negative effect
Summary
A paradigm mentions that the higher the risk, the higher the potential profit This “law” is applicable in emerging market economies, including Indonesia. In the first quarter of 2018, OJK has announced 74 entities suspected of undertaking unlicensed business activities and potentially harming the public These entities offer different types of investment products ranging from chain-breaking, savings with big prizes, multi-level marketing or MLM, savings and credit cooperatives to online trading, both offline or online platform. In this context, there are still many Indonesians, especially in suburban areas trapped by this illegal investment (OJK, 2018). It is an interesting issue to examine individual financial behavior thoroughly
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