Determination of Trust, Financial Literacy, and Investment Decisions on the Millennial Generation in the Sharia Capital Market
Article Sidebar
Main Article Content
Abstract
This study aims to examine the relationship between financial literacy, trust, and investment decisions among millennials in the Islamic capital market. The research focuses on young investors' understanding of Islamic financial instruments and how trust in financial institutions influences their investment behavior. Using a quantitative approach with a case study design, data were collected through surveys of 150 respondents and in-depth interviews with active investors. Data analysis was conducted using linear regression and structural equation modeling (SEM) to test the direct and indirect effects between variables. The results showed that financial literacy has a significant influence on investment decisions, with a correlation coefficient of 0.57 (p < 0.01). Trust in Islamic financial institutions also proved to be a critical determinant factor, with an influence coefficient of 0.64 (p < 0.01). Furthermore, financial literacy indirectly affects investment decisions through the mediation of trust (indirect effect = 0.31; p < 0.01). These findings suggest that improving financial literacy and strengthening Sharia supervision can increase millennial participation in Islamic investments. The implications of this research provide insights for regulators and financial institutions to develop more comprehensive financial education programs and build a sustainable investment ecosystem. Recommendations for future research include expanding the study population to Generation Z and exploring other external factors, such as the influence of social media on investment decisions. Thus, this study can serve as a foundation for enhancing financial literacy and developing a more inclusive Islamic capital market.
Article Details
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
References
Abbas, N., & Aravossis, S. (2024). Exploring the intersection of islamic economics and sustainable development: Challenges, opportunities, and policy implications. Seriat Ekonomisi, 1(2), 10-20. https://doi.org/10.35335/wyp8gp53
Akbar, A. H., Razak, S., & Hasbi, H. (2024). Enhancing Sharia Assets Among the Youth Through Financial Intelligence. Perbanas Journal of Islamic Economics and Business, 4(2), 223-237. https://doi.org/10.56174/pjieb.v4i2.268
Albaity, M., & Rahman, M. (2021). Customer loyalty towards Islamic banks: the mediating role of trust and attitude. Sustainability, 13(19), 10758. https://doi.org/10.3390/su131910758
Annisa, R., Majid, M. S. A., Agustina, M., Nurdin, R., Sartiyah, S., & Riyaldi, M. H. (2023, September). Do financial literacy and digital technology drive investment intention among Gen Z in the Islamic capital market: A mediating role of risk tolerance. In 2023 International Conference on Sustainable Islamic Business and Finance (SIBF) (pp. 276-280). IEEE. https://doi.org/10.1109/SIBF60067.2023.10379888
Aren, S., & Nayman Hamamci, H. (2023). Evaluation of investment preference with phantasy, emotional intelligence, confidence, trust, financial literacy and risk preference. Kybernetes, 52(12), 6203-6231. https://doi.org/10.1108/K-01-2022-0014
Asutay, M., Buana, G. K., & Avdukic, A. (2022). The impact of Islamic spirituality on job satisfaction and organisational commitment: exploring mediation and moderation impact. Journal of Business Ethics, 181(4), 913-932. https://doi.org/10.1007/s10551-021-04940-y
Dabas, S., & Nagvanshi, S. (2024). The role of social media in the adoption of stock investment applications among Gen Z. In Revolutionizing Customer-Centric Banking Through ICT (pp. 199-220). IGI Global. https://doi.org/10.4018/979-8-3693-2061-7.ch010
Dahliah, D. (2020). Economics during global recession: Sharia-economics as a post COVID-19 agenda. The Journal of Asian Finance, Economics and Business, 7(11), 1077-1085. https://doi.org/10.13106/jafeb.2020.vol7.no11.1077
Desky, H., & Mubarrak, H. (2022). The Decision of The Aceh Community to Invest in Shariah. International Journal of Management and Business (IJMEBE), 1(1), 46-58. https://doi.org/10.58540/ijmebe.v1i1.57
Haanurat, A. I. (2023). Problems of Investment Literacy and Utilization of Security Crowdfunding in Digital Age Through the Islamic Capital Market. Assyfa Journal of Multidisciplinary Education, 1(2), 104-115.
Haron, R., Othman, M., Fakhrunnas, F., & Nomran, N. M. (2022). Shari'ah governance of Islamic banks: The role of shari'ah supervisory board-a bibliometric analysis. IIUM Law Journal, 30(S2), 129-278. https://doi.org/10.31436/iiumlj.v30iS2.766
Juhro, S. M., Syarifuddin, F., & Sakti, A. (2022). Inclusive Welfare: On The Role of Islamic Public-Social Finance and Monetary Economics.
Kumari, D. A. T. (2020). The Impact of Financial Literacy on Investment Decisions: With Special Reference to Undergraduates in Western Province, Sri Lanka. Asian Journal of Contemporary Education, 4(2), 110-126. https://doi.org/10.18488/journal.137.2020.42.110.126
Mahadewi, E. P. (2024). Investment Risk Management Strategies in Sukuk: A Sharia Management Perspective. Kontigensi: Jurnal Ilmiah Manajemen, 12(2), 598-608. https://doi.org/10.56457/jimk.v12i2.609
Majeed, A., Ghumman, A. R., Abbas, Q., & Ahmad, Z. (2021). Role of entrepreneurial passion between entrepreneurial attitude, subjective norms, perceived behavioral control, and entrepreneurial intention: measuring the entrepreneurial behavior of Pakistani students. Pakistan Journal of Commerce and Social Sciences (PJCSS), 15(3), 636-662.
Nor, S. M., & Hashim, N. A. (2020). Trust motivates funders to participate in Shari’ah crowdfunding. Geografia, 16(2). https://doi.org/10.17576/geo-2020-1602-18
Norchaevna, N. S. (2024). Islamic Finance: Principles, Governance, Sustainability and Investment Insights. European Journal of Management, Economics and Business, 1(3), 206-216. https://doi.org/10.59324/ejmeb.2024.1(3).17
Nura, A., Hisan, K., & Mulia, R. (2024). Determinan of Invesments Interest in Sharia Digital Mutual Funds Among Generation Z In Langsa City. Jurnal Ilmu Ekonomi dan Bisnis Islam, 6(1), 16-29. https://doi.org/10.24239/jiebi.v6i1.255.16-29
Nuryitmawan, T. R. (2022). Determinants of the intention to participate in waqf: altruism, trust, and religiosity. Airlangga Journal of Innovation Management, 3(2), 199-211. https://doi.org/10.20473/ajim.v3i1.40261
Patrisia, D., Abror, A., Dastgir, S., & Rahayu, R. (2023). Generation Z’s financial behaviour: The role of Islamic financial literacy. ISRA International Journal of Islamic Finance, 15(2), 20-37. https://doi.org/10.55188/ijif.v15i2.540
Pradini, A. Y., & Faozan, A. (2023). Sharia financial literacy and inclusion: opportunities and challenges. Al-Mustashfa: Jurnal Penelitian Hukum Ekonomi Syariah, 8(2), 205-214. https://doi.org/10.24235/jm.v8i2.15406
Rahmawati, U., & Raharja, S. (2024). The Influence of Herding, Loss Aversion, And Availability on Investment Decision-Making with Fear of Missing Out as a Mediating Variable Among Generation Z Investors. Indonesian Interdisciplinary Journal of Sharia Economics (IIJSE), 7(3), 8461-8482.
Rahmi, M., Sholihah, D. R., & Nopiyanti, A. (2023). Millennial generation intentions in the Islamic Capital Market. Int. J. Emerg. Issues Islam. Stud, 3(1), 49-67. https://doi.org/10.31098/ijeiis.v3i1.1351
Riaz, M. (2022). Role-related Tensions in The Lived Experiences of Managers with a Marketing Function (MMFs) in Islamic Banks in the UK: An Interpretative Phenomenological Analysis.
Sani, A., & Ekowati, V. M. (2022). Spirituality to organizational citizenship behavior from Islamic perspective: mediating role of spirituality at work and organizational commitment. Journal of Islamic Marketing, 13(12), 2672-2694. https://doi.org/10.1108/JIMA-07-2020-0211
Santoso, B., Amilahaq, F., Ahmad, S., & Nasir, N. E. M. (2020, December). Study on Block-Chain Implementation in Zakat Management (Case Study in Indonesia). In ICIC 2020: Proceedings of the 1st International Conference on Islamic Civilization, ICIC 2020, 27th August 2020, Semarang, Indonesia (Vol. 232). European Alliance for Innovation. https://doi.org/10.4108/eai.27-8-2020.2303244
Shah, S. A. H., Langrial, A. H., & Mahmood, H. M. H. (2024). Differentiating Features of Islamic vs. Conventional Banks and Microfinance. Jahan-e-Tahqeeq, 7(2), 889-905.
Soumena, F. Y. (2024). A Critical Review of the Indonesian Council of Ulama (MUI) Fatwa Towards Increasing Sharia Financial Literacy (Systematic Literature Review). Journal of Economics Research and Social Sciences, 8(1), 133-151. https://doi.org/10.18196/jerss.v8i1.21498
SY, T. R., Alfin, A., Febriani, E., & Saputra, I. (2024, December). Potential of Zakat as an Alternative Source of Financing for MSMEs: A Review of the Perspective of Islamic Economics. In Proceeding of The International Conference on Economics and Business (Vol. 3, No. 2, pp. 39-48).
Tamara, D., & Budiman, F. (2022). New index ESG leaders & investment decisions in Indonesia relating to ESG principles. J. Mgmt. & Sustainability, 12, 64. https://doi.org/10.5539/jms.v12n1p64
Vangala, S. (2024). Impact Of Technological Advancements On Investment Behavior Across Age Demographics In The Digital Era. ESSEC Global BBA Dissertation.
Walid, A., Sutiah, S., & Shodiq, J. F. (2024). The effect of effective supervision on improving the quality of education in the era of disruption. International Journal Multidisciplinary (Ijmi), 1(2), 70-76. https://doi.org/10.61796/ijmi.v1i2.138
Wijaya, H. R., Hati, S. R. H., Ekaputra, I. A., & Kassim, S. (2024). The impact of religiosity and financial literacy on financial management behavior and well-being among Indonesian Muslims. Humanities and Social Sciences Communications, 11(1), 1-13. https://doi.org/10.1057/s41599-024-03309-6
Yahya, M. H., & Walid, A. (2024). Ekonomi Syariah Sebagai Fondasi Ekonomi Kerakyatan Untuk Mencapai Indonesia Yang Sejahtera. Journal EKOS, 2(2), 1-10. https://doi.org/10.58344/jmi.v2i10.653