Bandung — Financial literacy has a negative and significant influence on Generation Z’s decisions to use online loans, while digital financial behavior has a positive influence. The finding comes from a study by Nabila Aprillia and Novi Susyani of Jenderal Achmad Yani University, which analyzed 220 Generation Z respondents in Bandung City. Published in 2026, the study also found that locus of control did not significantly strengthen or weaken the relationships between financial literacy, digital financial behavior, and online loan usage decisions.
Online lending has become increasingly accessible alongside the growth of financial technology in Indonesia. Fast application processes, relatively simple requirements, and digital fund disbursement have made online loans an option for people seeking additional funds. However, this convenience can also create financial risks when borrowing is not accompanied by sufficient understanding of interest rates, fees, repayment capacity, and financial obligations.
The issue is particularly relevant to Generation Z because this group has grown up in an environment closely connected to digital technology. The study by Nabila Aprillia and Novi Susyani specifically examines online loan usage decisions among Generation Z in Bandung City. The research was conducted against the backdrop of significant online lending debt in West Java. In December 2024, total online loan debt in West Java was reported at IDR 19.56 trillion, while Bandung City accounted for approximately IDR 1.3 trillion.
Financial literacy is also an important part of the issue. The study notes that West Java’s financial literacy index stood at 43.90 percent, below the national figure of 49.68 percent. This indicates a need to strengthen people’s ability to understand financial products and make informed financial decisions.
In this study, financial literacy refers to an individual’s ability to understand financial information and use it to make decisions. This includes financial planning, saving, investment, risk management, and the ability to consider the consequences of financial choices.
Digital financial behavior, meanwhile, describes how individuals interact with technology-based financial services. The use of financial applications, digital transactions, and various financial technology services forms part of this behavior. In the context of online lending, familiarity with digital financial services may affect how easily individuals access and consider online loan products.
The study involved 220 Generation Z respondents aged 18–28 who lived in Bandung City and had used online loan services. Data were collected through an online questionnaire using Google Forms and a five-point rating scale. The data were then analyzed using Partial Least Squares Structural Equation Modeling, or SEM-PLS, through SmartPLS 4.0.
Most respondents were aged 22–25, representing 130 people or 59.09 percent of the sample. Another 70 respondents, or 31.82 percent, were aged 26–28, while 20 respondents, or 9.09 percent, were aged 18–21. In terms of monthly income, the largest group earned between IDR 1.5 million and IDR 3 million, representing 113 respondents or 51.36 percent.
Descriptive analysis showed that respondents had a very high level of financial literacy, with an average score of 4.524. Digital financial behavior recorded an average score of 4.101, classified as high. Locus of control received a score of 3.659, while online loan usage decisions received a score of 4.179, with both classified as high.
Despite the respondents’ very high level of financial literacy, the analysis showed a negative and significant relationship between financial literacy and online loan usage decisions. The coefficient was -0.290, with a t-statistic of 4.022 and a significance value of 0.000. The result indicates that individuals with higher financial literacy tend to be less likely to decide to use online loans.
Understanding financial products can encourage individuals to be more cautious before borrowing. Knowledge of interest rates, service fees, repayment periods, repayment capacity, and late-payment risks can encourage potential borrowers to consider their needs and the consequences of borrowing before making a decision.
Digital financial behavior produced a different result. It had a positive and significant influence on online loan usage decisions. The coefficient was 0.273, with a t-statistic of 2.440 and a significance value of 0.015. This indicates that individuals who are more accustomed to using and interacting with digital financial services tend to be more likely to use online loan services.
This relationship may occur because Generation Z is accustomed to conducting various financial activities through digital devices. Easy access to financial applications and fintech services can make obtaining information or applying for loans feel more convenient. Familiarity with technology may therefore become one factor encouraging the use of online lending services.
The researchers also examined the role of locus of control, referring to an individual’s belief regarding their ability to control conditions and decisions in their lives. The results showed that locus of control did not significantly moderate the relationship between financial literacy and online loan usage decisions. The significance value was 0.429, indicating that the moderating effect was not statistically significant.
A similar result was found for the relationship between digital financial behavior and online loan usage decisions. The interaction between locus of control and digital financial behavior produced a coefficient of 0.054, a t-statistic of 1.298, and a significance value of 0.194. These results indicate that locus of control did not significantly change the relationship between digital financial behavior and online loan usage decisions.
Importantly, the two main factors examined in the study did not fully explain online loan usage decisions. The R² value was only 10.5 percent, meaning that financial literacy and digital financial behavior explained 10.5 percent of the variation in online loan usage decisions within the research model. The remaining 89.5 percent was associated with other factors outside the model.
The researchers identified several other factors that may influence online loan usage decisions, including risk perception, lifestyle, consumption needs, self-control, financial attitudes, income levels, and financial technology literacy. These factors could be examined in future studies to develop a more comprehensive understanding of Generation Z’s behavior toward digital lending services.
The findings have implications for Generation Z, online lending providers, governments, and regulators. For users, understanding interest rates, administrative fees, loan terms, repayment capacity, and late-payment risks is essential before taking an online loan. Borrowing decisions should not be based solely on how easily funds can be obtained but also on the borrower’s ability to meet repayment obligations.
For online lending providers, transparent information regarding costs, interest rates, loan terms, and risks is important for consumer protection. Governments and regulators can strengthen digital financial literacy programs and supervision of online lending services to encourage more responsible use of digital financial products.
The study demonstrates that financial literacy can help reduce the tendency to use online loans, while digital financial habits may increase the likelihood of using such services. However, online loan usage decisions remain complex because most of the variation is influenced by factors outside the research model.
Because the study focused only on Generation Z in Bandung City, the researchers recommend that future studies involve broader populations and examine psychological, social, lifestyle, risk-perception, and economic factors. Such approaches could provide a more comprehensive explanation of why Generation Z chooses to use online lending services.
Authors
Nabila Aprillia — Jenderal Achmad Yani University.
Novi Susyani — Jenderal Achmad Yani University.
Research Source
Article Title: The Influence of Financial Literacy and Digital Financial Behavior on Online Loan Usage Decisions among Generation Z in Bandung City: The Moderating Role of Locus of Control
Journal: International Journal of Scientific Multidisciplinary Research (IJSMR), Vol. 4 No. 8, 2026, pp. 1757–1774.
DOI: https://doi.org/10.55927/ijsmr.v4i8.137
Journal Link: https://journalijsmr.my.id/index.php/ijsmr
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