Improving financial literacy education programs

Oct 13, 2025 by wbrum.org 22 views

The Influence of Financial Literacy, Risk Tolerance, Cognitive Bias, and Financial Technology on Stock Market Participation in Students of Accounting Programs at the University of North Sumatra - Indonesia

Introduction

In recent years, investor participation in Indonesia has experienced a significant increase, especially among generation Z who actively use the internet in everyday life. Although the number of new investors is quite large, there is an imbalance between the number of investors on the islands of Sumatra and Java. This study aims to investigate the effect of financial literacy, risk tolerance, cognitive bias, and financial technology on the participation of the generation Z stock market, especially among students of the accounting study program at the University of North Sumatra.

Background

The stock market has become an increasingly popular investment option for young people, particularly in Indonesia. With the rise of fintech and online trading platforms, it has become easier for individuals to participate in the stock market. However, despite the growing interest in investing, there is still a significant gap in the level of financial literacy among young investors. This study aims to investigate the factors that influence the participation of students in the stock market, with a focus on financial literacy, risk tolerance, cognitive bias, and financial technology.

Methodology

This study involved 235 students from the class of 2019, 2020, and 2021, both those who had invested and those who had not been involved in the capital market. The method used in this study is descriptive statistical analysis and logistics regression through SPSS 25 to process data.

Results

The results showed that simultaneously, the four independent variables, namely financial literacy, risk tolerance, cognitive bias, and financial technology, had a significant influence on participation in the stock market. Individually, risk tolerance and financial technology show a significant positive effect on stock market participation. Meanwhile, financial literacy has an insignificant negative influence, and cognitive bias shows a positive but also not significant effect on stock market participation.

In-Depth Analysis

Financial Literacy

Financial literacy is the ability to understand and use financial information to make appropriate investment decisions. Although in this study financial literacy shows an insignificant negative effect, this could be caused by the low understanding of students about the concept of complex investment. Therefore, it is important to improve financial literacy education programs on campus so that students can be better prepared to face the dynamics of the stock market.

Financial literacy is a crucial factor in making informed investment decisions. It involves understanding financial concepts, such as risk management, investment strategies, and financial planning. Students who have a good understanding of financial literacy are more likely to make informed decisions about their investments. However, the results of this study show that financial literacy has an insignificant negative effect on stock market participation. This could be due to the low level of financial literacy among students, which makes them less likely to participate in the stock market.

Risk Tolerance

Risk tolerance refers to the ability and willingness of individuals to receive potential losses in investing. The results showed that risk tolerance has a significant positive influence on stock market participation. Students who have high risk tolerance tend to be more active in investing. This shows the need for an approach that educates students about investment risks and how to manage them.

Risk tolerance is a critical factor in investment decisions. It involves the ability to withstand potential losses and take calculated risks. Students who have high risk tolerance are more likely to participate in the stock market, as they are willing to take on the potential risks associated with investing. The results of this study show that risk tolerance has a significant positive effect on stock market participation, which highlights the importance of educating students about investment risks and how to manage them.

Cognitive Bias

Cognitive bias is a systematic mistake in thinking that influences decision making. Although the results showed the insignificant effect of positive cognitive bias, students still need to be aware of this bias, so that they can make more rational investment decisions. The training program on the introduction of cognitive bias can be very useful.

Cognitive bias is a common phenomenon that affects decision making. It involves systematic errors in thinking that can lead to irrational decisions. Students who are aware of cognitive bias can make more rational investment decisions, which can lead to better outcomes. However, the results of this study show that cognitive bias has an insignificant effect on stock market participation. This could be due to the lack of awareness among students about cognitive bias and its impact on investment decisions.

Financial Technology

Financial technology, or fintech, provides easy access for generation Z to participate in the stock market. With various investment applications available, students are more interested in investing. The involvement of this technology not only accelerates the investment process, but also opens opportunities for students to learn more about investment in the stock market.

Financial technology has revolutionized the way people invest in the stock market. It provides easy access to investment platforms, making it easier for students to participate in the stock market. The results of this study show that financial technology has a significant positive effect on stock market participation, which highlights the importance of fintech in facilitating investment decisions.

Conclusion

This study shows that the four factors analyzed have an influence on student participation in the stock market. By increasing financial literacy, understanding risk tolerance, and reducing the impact of cognitive bias, and utilizing existing financial technology, students are expected to be more active and smart in investing. The university and educational institutions need to provide more support in the form of training and counseling programs to optimize the potential of generation Z in the Indonesian capital market.

Recommendations

Based on the findings of this study, the following recommendations are made:

Improving financial literacy education programs: The university and educational institutions should provide more support in the form of training and counseling programs to improve financial literacy among students.
Educating students about risk tolerance: Students should be educated about the importance of risk tolerance and how to manage investment risks.
Reducing the impact of cognitive bias: Students should be aware of cognitive bias and its impact on investment decisions.
Utilizing financial technology: The university and educational institutions should provide more support in the form of training and counseling programs to utilize existing financial technology and facilitate investment decisions.

By implementing these recommendations, students are expected to be more active and smart in investing, which can lead to better outcomes in the stock market.
Frequently Asked Questions (FAQs) about the Influence of Financial Literacy, Risk Tolerance, Cognitive Bias, and Financial Technology on Stock Market Participation in Students of Accounting Programs at the University of North Sumatra - Indonesia

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of financial literacy, risk tolerance, cognitive bias, and financial technology on the participation of the generation Z stock market, especially among students of the accounting study program at the University of North Sumatra.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the factors that influence the participation of students in the stock market. The findings of this study can be used to inform the development of financial education programs and policies that aim to promote financial literacy and investment awareness among students.

Q: What are the key findings of this study?

A: The key findings of this study are:

Financial literacy has an insignificant negative effect on stock market participation.
Risk tolerance has a significant positive effect on stock market participation.
Cognitive bias has an insignificant effect on stock market participation.
Financial technology has a significant positive effect on stock market participation.

Q: What are the implications of this study?

A: The implications of this study are:

Financial education programs should focus on improving financial literacy among students.
Students should be educated about the importance of risk tolerance and how to manage investment risks.
Students should be aware of cognitive bias and its impact on investment decisions.
Financial technology should be utilized to facilitate investment decisions and promote financial inclusion.

Q: What are the limitations of this study?

A: The limitations of this study are:

The study is limited to students of the accounting study program at the University of North Sumatra.
The study only investigates the effect of financial literacy, risk tolerance, cognitive bias, and financial technology on stock market participation.
The study does not investigate other factors that may influence stock market participation.

Q: What are the recommendations of this study?

A: The recommendations of this study are:

Financial education programs should be improved to promote financial literacy among students.
Students should be educated about the importance of risk tolerance and how to manage investment risks.
Students should be aware of cognitive bias and its impact on investment decisions.
Financial technology should be utilized to facilitate investment decisions and promote financial inclusion.

Q: What are the future research directions?

A: The future research directions are:

Investigating the effect of other factors on stock market participation, such as demographic characteristics and socioeconomic status.
Investigating the impact of financial education programs on stock market participation.
Investigating the role of financial technology in promoting financial inclusion and investment awareness.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

Financial education programs should be developed to promote financial literacy among students.
Students should be educated about the importance of risk tolerance and how to manage investment risks.
Students should be aware of cognitive bias and its impact on investment decisions.
Financial technology should be utilized to facilitate investment decisions and promote financial inclusion.

Q: What are the policy implications of this study?

A: The policy implications of this study are:

Financial education programs should be integrated into the curriculum of accounting study programs.
Students should be required to take courses on financial literacy and risk management.
Financial technology should be promoted to facilitate investment decisions and promote financial inclusion.
Financial regulations should be developed to protect investors and promote financial stability.