THE INFLUENCE OF FINANCIAL EDUCATION, FINANCIAL SOCIALIZATION, AND MONEY ATTITUDE TOWARD FINANCIAL LITERACY AND ITS IMPLICATION ON STOCK MARKET PARTICIPATION

Abstract

According to Indonesia’s Central Securities Depositories (KSEI), the number of domestic investors in Indonesia is still very small, which is only around 0.2% from the total citizens in Indonesia which is up to 255 million people. The Indonesia’s Financial Services Authority (OJK) stated that the small number of domestic investors in Indonesia is caused by the low level of financial literacy among Indonesian, which is only 21.8%. Moreover, based on the national financial literacy survey by OJK in 2013, level of financial literacy in capital market is only 3.79%. OJK also stated that to increase the level of financial literacy among Indonesian, national financial education and financial socialization programs need to be implemented. The objective of this research is to understand the influence of financial education, financial socialization, and money attitude toward financial literacy and how it can give impact to stock market participation. The respondents of this research are 250 investors in Jakarta. Variables in this research were analyzed by using the Structural Equations Modeling. This research showed that financial socialization and money attitude have significant influences, while financial education does not have significant influence toward financial literacy. At the end, financial literacy would impact the participation in stock market.