UII Study: Self-Doubt Drives Students Toward Short-Term Investments While Avoiding Long-Term Commitment

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FORMOSA NEWS

A lack of confidence in one's own analytical abilities is a major factor shaping the financial decisions of young investors. A 2026 study by researchers Safina Aulianisa and Sri Mulyati from the Faculty of Business and Economics at the Islamic University of Indonesia (UII) reveals how the psychological phenomenon of underconfidence bias significantly influences student investment behavior. Conducted among management students from the 2022 to 2024 cohorts, this research serves as a crucial reminder that theoretical financial literacy alone is insufficient. Without measured self-confidence, young investors risk missing golden opportunities to build long-term wealth amidst Indonesia's rapidly expanding capital market.

Background: The Young Investor Boom and Psychological Traps

Digital transformation and the widespread accessibility of financial technology (fintech) applications have reshaped how Indonesians view financial management. Data from the Indonesian Central Securities Depository (KSEI) highlights a massive 280% surge in capital market investors over four years, reaching 14.84 million by the end of January 2025. The younger generation is the primary driver of this expansion, with 55.58% of investors aged under 40, the majority holding high school or bachelor's degrees.

Despite growing access and financial knowledge, real-world investor behavior often deviates from rational decision-making. Modern behavioral finance shows that emotions and cognitive biases play a dominant role when individuals deal with financial risks. On university campuses, many students who have completed financial management courses still fall prey to underconfidence bias—a tendency to doubt their own knowledge, analytical skills, and personal capacity. This self-doubt frequently leads them to delay decisions, act overly cautious, or divert funds toward short-term consumer goods rather than productive investment assets.

Methodology: Measuring Campus Investor Hesitation

The study utilized a quantitative approach to examine the cause-and-effect relationship between psychological self-doubt and investment time horizons. The survey involved 291 active undergraduate students from UII’s Management Study Program (cohorts 2022–2024) who had completed the Financial Management course and possessed active investing experience.

Primary data was collected through an online questionnaire using a five-point Likert scale and evaluated using Partial Least Squares–Structural Equation Modeling (PLS-SEM) via SmartPLS 4 software. This statistical methodology allowed the researchers to clearly observe how self-doubt triggers or alters student financial decisions.

Key Findings: Diverging Paths in Investment Strategies

The data analysis revealed that underconfidence bias has a statistically significant yet opposing effect depending on the chosen investment horizon:

• Driving Short-Term Investments (Significant Positive Effect): Self-doubt has a significant positive influence on short-term investment decisions ($\beta = 0.482$; $p < 0.001$). Students who feel uncertain about their analytical capabilities are actually more inclined to engage in short-term investment strategies. This indicates that hesitation drives young investors toward highly liquid assets or quick-turnaround trades, even though short-term instruments are often prone to high price volatility and market risks.
• Hindering Long-Term Investments (Significant Negative Effect): Conversely, underconfidence bias exerts a significant negative effect on long-term investment decisions ($\beta = -0.167$; $p = 0.002$). Low self-confidence discourages students from committing their funds to assets with horizons exceeding one year. Concerns over future uncertainties lead them to delay or avoid long-term investments, despite these instruments offering greater stability and superior wealth-accumulation potential through compounding returns.
• Psychological Dominance in Short-Term Choices: Statistical models show that underconfidence bias accounts for 23.2% of the variance in students' short-term investment decisions. Meanwhile, it explains only 2.8% of the variance in long-term decisions, proving that long-term commitments are far more complex and heavily influenced by external factors such as financial goals, risk tolerance, and personal income.

Impact and Implications for Education and Society

These research findings carry vital implications for higher education institutions, financial market practitioners, and public policymakers. Historically, investment education programs have focused predominantly on technical calculations and chart analysis. This UII study demonstrates that mental preparation and behavioral finance awareness are just as critical as technical skills.

Educational institutions and capital market players must design curricula and financial literacy initiatives that not only impart knowledge but also instill decision-making confidence. Students must be trained to validate their own analyses so they do not overly rely on external opinions or succumb to herding behavior.

Paraphrasing the conclusions of researchers Safina Aulianisa and Sri Mulyati at the Islamic University of Indonesia, understanding psychological biases is essential for university students. Strengthening financial literacy alongside psychological awareness will help future business professionals overcome self-doubt, enabling them to make more rational, measured, and sustainable investment decisions for their long-term financial well-being.

Author Profiles

• Safina Aulianisa Corresponding Author. Researcher and undergraduate student in the Management Study Program, Faculty of Business and Economics, Islamic University of Indonesia (UII). Focuses on research and expertise in Financial Management and Behavioral Finance.
• Sri Mulyati Co-Author. Lecturer and researcher within the Faculty of Business and Economics, Islamic University of Indonesia (UII), specializing in management and financial decision analysis.

Research Source

• Article Title: The Effect of Underconfidence Bias Perception on Investment Decisions of Management Students of the Islamic University of Indonesia
• Authors: Safina Aulianisa & Sri Mulyati
• Affiliation: Universitas Islam Indonesia (Islamic University of Indonesia)
• Publication Year: 2026
• Publication License: Open-access under the Creative Commons Attribution 4.0 International (CC BY 4.0) license
• DOI / Official URL: https://doi.org/10.55927/ijbae.v5i4.52