The Influence of Financial Literacy, Risk Perception, and Digital Trading Platforms on Generation Z Investment Decisions in Surabaya

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Surabaya— Financial Literacy and Easy Trading Apps Shape Gen Z Investment Decisions in Surabaya, Study Finds. The research conducted by Annisa Nur Rochmah, Christian Hadinata Hodianto, Lufvi Selvi Febrianti, Jeasson Oktavianus Gatur, and Maria Yovita R Pardin from Universitas 17 Agustus 1945 Surabaya, published in January 2026 in the International Journal of Management Analytics (IJMA).
The research conducted by Annisa Nur Rochmah, Christian Hadinata Hodianto, Lufvi Selvi Febrianti, Jeasson Oktavianus Gatur, and Maria Yovita R Pardin found that financial literacy, risk perception, and digital trading platforms are the main factors influencing Generation Z’s investment decisions.

Why This Study Matters: Gen Z Has Huge Potential, but Participation Is Still Low

Generation Z (born between 1997 and 2012) is Indonesia’s largest demographic group. According to data cited in the paper, Indonesia has around 75 million Gen Z citizens, making them a major economic force. In Surabaya, Gen Z accounts for roughly 30% of the city’s population, which is estimated at around 3 million people.

Despite this potential, investment participation remains relatively low.

The article points out several concerning indicators:

• Indonesia’s national financial literacy index is only 49.68%, far below the national target of 75%.
• Investment participation among young people in Surabaya is around 15%.
• Gen Z’s average financial literacy score is only 38.5 out of 100.
• Only 40% of Gen Z respondents understand basic investment risk and return concepts.

·         Many beginner investors suffer losses, with 60% experiencing portfolio declines within their first six months.

These numbers show a major gap: Gen Z has economic power, but many are not fully prepared to navigate the risks of modern digital investing.

Three Factors That Determine Gen Z Investment Decisions

Instead of looking at one factor in isolation, the researchers examined three drivers simultaneously:

1) Financial Literacy

Financial literacy refers to the ability to understand financial concepts and manage money effectively, including investment fundamentals such as diversification, inflation, compound interest, and long-term planning.

The authors describe financial literacy as a crucial foundation for rational investment behavior—especially for Gen Z, who are highly active in the digital economy.

2) Risk Perception

Risk perception is how someone personally evaluates the uncertainty and possible losses from investing.

The paper notes that risk perception is subjective. It is shaped by emotions, experience, and knowledge. Many young people avoid investing because they view the stock market as “too risky,” especially after economic shocks such as the COVID-19 period.

3) Digital Trading Platforms

Digital trading platforms include apps and online systems that allow users to invest directly through mobile devices.

The study points out that digital platforms provide:

• easy access,
• real-time market information,
• efficiency,
• lower transaction costs,
• and convenience for beginners.

In Indonesia, apps such as Bibit, Ajaib, and Bareksa have changed the investment landscape—making Gen Z one of the most dominant user groups.

How the Study Was Conducted

The researchers used a quantitative approach and analyzed the data with multiple linear regression.

Key details include:

• Target group: Gen Z aged 18–27 living in Surabaya
• Criteria: respondents had invested using digital platforms
• Data collection: online questionnaire
• Responses collected: 58
• Valid datasets used: 50
• Sampling method: purposive sampling
• Data processing: SPSS regression analysis

The authors also tested data quality using:

·         validity tests,

·         reliability tests (Cronbach’s alpha),

·         classical assumption tests such as multicollinearity and heteroscedasticity.

Main Findings: Literacy and Platforms Increase Investment, Risk Perception Reduces It

The study produced a regression equation that clearly shows the direction of each factor:

Y = −7.020 + 1.518X1 − 0.522X2 + 0.254X3

251+IJMA+75-86

Where:

• X1 = Financial Literacy
• X2 = Risk Perception
• X3 = Digital Trading Platforms
• Y = Investment Decisions

What the numbers mean in plain language:

Financial literacy has the strongest positive effect

The coefficient for financial literacy is 1.518, with significance < 0.001.

This means that as financial knowledge increases, investment decisions become significantly stronger and more rational.

Risk perception has a significant negative effect

The coefficient for risk perception is −0.522, also significant at < 0.001.

In practice, this means that the more Gen Z feels investing is risky, the less likely they are to invest.

Digital trading platforms also increase investment decisions

The coefficient for digital platforms is 0.254, with significance < 0.001.

The Bigger Story: Digital Convenience Helps, but Knowledge Matters More

One of the most important takeaways from this study is that digital trading apps do encourage investment, but financial literacy remains the most powerful factor.

In other words:
A smooth and modern investment app can attract Gen Z users, but without strong financial understanding, many will still hesitate—or make poor decisions.

The authors also note that high risk perception is often tied to:

• lack of knowledge,
• fear of market volatility,
• and emotional responses to financial losses.

This suggests that improving literacy may also reduce unrealistic fear—helping young investors view risk more accurately.

Practical Impact: What This Means for Society, Regulators, and Fintech Companies

The study offers direct implications for multiple stakeholders in Indonesia’s digital economy.

For the government and regulators (OJK, BI)

The findings support stronger and more targeted financial education for young people. The authors emphasize that risk perception must be shaped into something “realistic and measurable” through investment education and risk management understanding.

For schools and universities

The study strengthens the argument for integrating practical financial literacy modules into education—especially in cities like Surabaya where digital investment platforms are widely used.

For fintech and investment platform providers

Digital platforms have a proven positive effect. But the study suggests that investment apps should not only focus on transactions and features.

Instead, platforms can increase user success by improving:

• educational tools,
• risk explanations,
• beginner-friendly guidance,
• and trust-building features.

For Gen Z investors

The research reinforces a simple but critical point:

Understanding the basics of finance and risk is the difference between investing wisely and investing blindly.

Authors’ Perspective

Although written in an academic format, the conclusions are clear.

The researchers state that:

• financial literacy improves rational investment decisions,
• high risk perception reduces willingness to invest,
• and digital platforms encourage investment participation through convenience, access, and information availability.

They also emphasize the need for collaboration between:

• government,
• financial authorities,
• and digital investment service providers
  to build a safer, more accessible investment ecosystem for young people.

Author Profiles

• Annisa Nur Rochmah - Universitas 17 Agustus 1945 Surabaya
• Christian Hadinata Hodianto - Universitas 17 Agustus 1945 Surabaya
• Lufvi Selvi Febrianti - Universitas 17 Agustus 1945 Surabaya
• Jeasson Oktavianus Gatur -  Universitas 17 Agustus 1945 Surabaya
• Maria Yovita R Pardin - Universitas 17 Agustus 1945 Surabaya

Research Source

Annisa, Christian, Lufvi, Jeasson, Maria.The Influence of Financial Literacy, Risk Perception, and Digital Trading Platforms on Generation Z Investment Decisions in Surabaya International Journal of Management Analytics (IJMA)Vol. 4 No. 1 (Januari 2026), hlm. 75–86                                                                                                                                                                    DDOI:https://doi.org/10.59890/ijma.v4i1.251                                                                                        URL: https://dmimultitechpublisher.my.id/index.php/ijma