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IJSTR >> Volume 8 - Issue 7, July 2019 Edition

International Journal of Scientific & Technology Research  
International Journal of Scientific & Technology Research

Website: http://www.ijstr.org

ISSN 2277-8616

Do Young Surabaya’s Investors Make Rational Investment Decisions?

[Full Text]



Sri Utami Ady, Arif Hidayat



Financial Literacy, Overconfidence, Regret Aversion, Risk Tolerance, investment decisions.



The purpose of this study was to analyze Financial Literacy, Regret Aversion Overconfidence, and Risk Tolerance against investment decisions of young Surabaya’s investor. The approach in this study was (explanatory research) which was a causal approach to finding evidence of a causal relationship through the influence generated between the independent variable and the dependent variable. The method used in this study was a survey method with a quantitative approach with a sample of 63 respondents using multiple linear regression analysis to get a better understanding of the effect of independent variables on the dependent variable. The results of this study indicate that: (1) financial literacy had no significant positive impact on investment decision making. (2) overconfidence had a significant positive effect on investment decision making. (3) regret aversion bias had no significant adverse impact on investment decision making. (4) risk tolerance has no significant positive effect on investment decision making. (5) Simultaneously financial literacy, over-evidence, regret aversion bias, and risk tolerance had a substantial impact on investment decision making.This result confirmed that most of young Surabaya investor was not rasional. Most young investors who may be more unstable in emotions, subsequent research was expected to be more varied. To reduced overconfidence it was better before making an investment decision investors do the right analysis, always update knowledge, update the latest news, and still had a trading plan so that it can reduce overconfidence. Investors should have high confidence, and be rational in making decisions, not just transacting shares due to herding which results in capital market instability.



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