Surabaya — A 2026 study by Nanang Setiyawan and Insyirah Putikadea from Universitas Negeri Surabaya reveals that financial literacy and social influence are the strongest factors shaping investment decisions among Millennial and Gen Z workers. Published in the International Journal of Scientific Multidisciplinary Research, the findings highlight a growing gap between rapid investor participation and limited financial understanding, making the issue increasingly relevant in today’s digital investment era.
The research arrives at a time when young people dominate Indonesia’s capital market. More than 80 percent of investors come from Millennial and Gen Z groups, driven by easy access to financial platforms and online investment tools. However, this surge in participation has not been matched by adequate financial knowledge, raising concerns about the quality of decision-making among new investors.
In Indonesia, financial inclusion has reached high levels, meaning people are actively using financial services. Yet, financial literacy remains significantly lower. This imbalance suggests that many individuals are engaging in investment activities without fully understanding risks, asset selection, or long-term financial planning. The study conducted in Surabaya provides a closer look at how these dynamics play out in a major urban economy with strong investment activity.
The research focuses on working individuals rather than students, offering a more realistic picture of financial behavior. Surabaya was selected due to its large workforce and active participation in the capital market, making it a representative case for analyzing investment decisions in an emerging market context.
The study used a quantitative approach based on data collected from 100 respondents aged between 18 and 40. All participants were active investors and employed in various sectors, including private companies, entrepreneurship, and public service. Data were gathered through structured questionnaires designed to measure financial literacy, overconfidence bias, herding behavior, and investment decision quality.
The analysis shows a clear pattern. Financial literacy emerges as the most influential factor in shaping investment decisions. Individuals with higher financial knowledge are more capable of evaluating risks, understanding financial products, and making structured, rational choices. This reinforces the idea that knowledge plays a central role in financial behavior.
Herding behavior, or the tendency to follow others, also shows a strong and significant effect. Many young investors rely on social cues such as market trends, peer recommendations, or online discussions when making decisions. In uncertain market conditions, following the crowd is often perceived as a safer strategy.
In contrast, overconfidence bias does not show a significant impact in this study. While previous research often links overconfidence to risky investment behavior, the findings in Surabaya suggest that young workers may be more cautious or influenced by external factors rather than relying solely on personal judgment.
Together, these variables explain 33.3 percent of the variation in investment decisions. The remaining influence comes from other factors not covered in the study, such as emotional responses, financial experience, or technological engagement.
Nanang Setiyawan from Universitas Negeri Surabaya emphasizes that financial literacy is not just about understanding concepts, but about applying knowledge in real-life decision-making. He highlights that individuals with strong financial literacy are better equipped to avoid common investment mistakes and respond more effectively to market changes.
The study also confirms that social influence plays a critical role in modern investment behavior. With the rise of digital platforms and financial content on social media, information spreads quickly, often shaping collective decision-making. This creates both opportunities and risks, especially for inexperienced investors.
From a practical perspective, the findings carry important implications. For policymakers, the research underscores the urgency of strengthening financial education programs, particularly for young workers who are actively participating in financial markets. Educational initiatives should go beyond basic knowledge and focus on critical thinking, risk assessment, and long-term planning.
For financial institutions, understanding the behavior of Millennial and Gen Z investors can support the development of more targeted products and services. Platforms that combine user-friendly design with educational features may help bridge the gap between access and understanding.
For individuals, especially new investors, the study serves as a reminder that following trends without proper analysis can lead to poor outcomes. Building financial literacy and maintaining independent judgment are essential steps toward sustainable investment success.
As digital transformation continues to reshape the financial landscape, the ability to make informed decisions becomes increasingly important. Without sufficient knowledge, the ease of investing may lead to higher risks rather than better financial outcomes.
Nanang Setiyawan of Universitas Negeri Surabaya notes that improving financial literacy should be a shared responsibility between educational institutions, government agencies, and the financial industry. He stresses that empowering young investors with knowledge is key to creating a more stable and resilient financial ecosystem.
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