Behavioral Biases in Islamic Retail Investing: The Moderating Role of Demographics
DOI:
https://doi.org/10.22373/share.v14i1.28784Keywords:
Behavioral Finance, Investment Decisions, Moslim Retail Investors, Demographic Factors, IndonesiaAbstract
Young Muslim retail investors in the Indonesian capital market often face challenges stemming from various behavioral finance biases that can negatively impact their investment decisions. This study examines the influence of behavioral finance biases—herding, overconfidence, mental accounting, loss aversion, and status quo bias—on the investment decisions of novice Muslim retail investors in Indonesia. It further explores the moderating effects of demographic factors including generation, gender, education, and income. Using a quantitative research design, data were collected from 318 respondents through a structured questionnaire, with 310 valid responses analyzed using multiple regression and moderation analysis via Hayes’ PROCESS macro in SPSS. The results indicate that all five behavioral biases negatively affect investment decisions, and demographic variables significantly moderate these effects. These findings underscore the importance of financial education and advisory services tailored to both behavioral tendencies and Islamic financial values to support informed decision-making among young Muslim investors. Despite its demographic limitations, this study contributes to a deeper understanding of behavioral finance within the Islamic finance context.
========================================================================================================
ABSTRAK - Bias Perilaku dalam Investasi Ritel Syariah: Peran Moderasi Demografis. Investor ritel Muslim pemula di pasar modal Indonesia seringkali menghadapi tantangan yang disebabkan oleh berbagai bias perilaku keuangan yang dapat berdampak negatif pada keputusan investasi mereka. Penelitian ini mengkaji pengaruh bias perilaku keuangan—herding, overconfidence, mental accounting, loss aversion, dan status quo bias—terhadap keputusan investasi investor ritel Muslim pemula di Indonesia. Studi ini juga menganalisis peran moderasi faktor demografis seperti generasi, jenis kelamin, pendidikan, dan pendapatan. Dengan menggunakan pendekatan kuantitatif, data dikumpulkan dari 318 responden melalui kuesioner terstruktur, dengan 310 data valid yang dianalisis menggunakan regresi berganda dan analisis moderasi melalui PROCESS macro dari Hayes dalam SPSS. Hasil penelitian menunjukkan bahwa kelima bias perilaku berpengaruh negatif terhadap keputusan investasi, dan variabel demografis memoderasi pengaruh tersebut secara signifikan. Temuan ini menekankan pentingnya edukasi dan layanan konsultasi keuangan yang disesuaikan dengan kecenderungan perilaku dan nilai-nilai keuangan Islam untuk mendukung pengambilan keputusan yang lebih terinformasi di kalangan investor Muslim muda. Meskipun memiliki keterbatasan pada fokus demografis, penelitian ini memberikan kontribusi terhadap pemahaman yang lebih mendalam mengenai perilaku keuangan dalam konteks keuangan Islam.References
Abdullah, N. I., & Anderson, H. (2015). Financial literacy and investment decisions of Muslim investors. Journal of Islamic Accounting and Business Research, 6(2), 227–243. https://doi.org/10.1108/JIABR-02-2014-0008
Adielyani, R., & Mawardi, M. (2020). The role of financial education in overcoming herding bias in beginner investors. Journal of Islamic Finance and Economics, 8(1), 45–60. https://doi.org/10.24912/jm.v28i3.2009
Ali, S. S. (2008). Islamic capital markets: Products, regulation and development. Islamic Research and Training Institute.
Badola, R., Ahmad, S., & Yusof, M. F. (2023). Self-confidence in investment: An Islamic finance analysis. Financial Literacy Journal, 15(3), 112–129.
Brown, A. L., Imai, T., Vieider, F. M., & Camerer, C. F. (2024). Meta-analysis of empirical estimates of loss aversion. Journal of Economic Literature, 62(2), 485-516.
Clark, G. L., & Monk, A. H. B. (2017). Institutional investors in global markets. Oxford University Press.
Dean, S., Rahman, A., & Ismail, A. H. (2017). Status quo bias and its implications for Muslim investment decisions. Journal of Islamic Financial Studies, 3(2), 78–95. https://doi.org/10.12785/jifs/030204
Deo, M., & Sundar, V. (2015). Gender difference: Investment behavior and risk taking. SCMS Journal of Indian Management, 12(3), 74.
Godefroid, M. E., Plattfaut, R., & Niehaves, B. (2023). How to measure the status quo bias? A review of current literature. Management Review Quarterly, 73(4), 1667-1711.
Hasan, Z. (2009). Corporate governance: Western and Islamic perspectives. International Review of Business Research Papers, 5(1), 277–293.
Hassan, M.K., & Mahlknecht, M. (2011). Islamic capital markets: Products and strategies. Wiley Finance.
Hayes, A. F. (2012). PROCESS: A Versatile Computational Tool for Observed Variable Mediation, Moderation, and Conditional Process Modeling.
http://www.afhayes.com/public/process2012.pdf
Ibrahim, A., & Kamri, N. A. (2017). The ethical practices of Islamic banking: an analysis from customer satisfaction perspective. MIQOT: Jurnal Ilmu-ilmu Keislaman, 41(1).
Jiang, W., Halim, E., & Fauzi, A. (2018). Pengaruh faktor eksternal dan internal terhadap fenomena herding behavior di pasar saham syariah Indonesia [The influence of external and internal factors on herding behavior phenomena in Indonesia's Islamic stock market]. Jurnal Ekonomi Syariah Indonesia, 8(2), 45–59.
Johri, S., Palanisamy, K., & Rahman, M. M. (2023). Behavioural biases in real estate investment: A literature review and future research agenda. Property Management, 41(1), 120–135. https://doi.org/10.1108/PM-03-2022-0019
Kahneman, D., & Tversky, A. (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2), 263–291. https://doi.org/10.2307/1914185
Kamri, N. A., Ramlan, S., & Ibrahim, A. (2014). Qur'anic work ethics. Journal of Usuluddin, 40, 135-172.
Mahyudi, M., & Abdul Aziz, H. (2017). Behavioural finance from an Islamic perspective. Journal of Islamic Finance, 6(2), 22–33.
Masruki, R., & Hussin, M. Y. M. (2018). Islamic financial behaviour: Evidence from Muslim investors. International Journal of Islamic and Middle Eastern Finance and Management, 11(2), 274–291. https://doi.org/10.1108/IMEFM-07-2017-0179
Muehlbacher, S., & Kirchler, E. (2019). The influence of mental accounting on investment decisions: An Islamic finance approach. Journal of Behavioral Finance, 20(3), 345–358. https://doi.org/10.1080/15427560.2019.1608245
OJK. (2023). Laporan statistik pasar modal [Capital market statistical report]. https://www.ojk.go.id
Olsen, R. A., & Cox, C. M. (2001). The influence of gender on the perception and response to investment risk: The case of professional investors. The journal of psychology and financial markets, 2(1), 29-36.
Pikulina, E., Renneboog, L., & Tobler, P. N. (2017). Overconfidence and investment: An experimental approach. Journal of Corporate Finance, 47, 41–58. https://doi.org/10.1016/j.jcorpfin.2017.07.010
Samuelson, W., & Zeckhauser, R. (1988). Status quo bias in decision making. Journal of Risk and Uncertainty, 1(1), 7–59. https://doi.org/10.1007/BF00055564
Sari, N., Ibrahim, A., Muzammil, M., & Muksal, M. (2024). Managing Financing Risk of Islamic Banking Products in Indonesia: A Value at Risk Approach. Jurnal Ilmiah Islam Futura, 24(1), 213-240.
Silva, E. M., de Lacerda Moreira, R., & Bortolon, P. M. (2023). Mental Accounting and decision making: a systematic literature review. Journal of Behavioral and Experimental Economics, 107, 102092.
Stanovich, K. E., & West, R. F. (2008). On the relative independence of thinking biases and cognitive ability. Journal of personality and social psychology, 94(4), 672.
Sundararajan, V., & Errico, L. (2002). Islamic financial institutions and products in the global financial system: Key issues in risk management and challenges ahead (IMF Working Paper No. 02/192). International Monetary Fund.
Tahir, A. N., & Danarsari, D. N. (2023). App-based investment platform and investment decision making: A study of retail investor behavior in Indonesia. Eduvest – Journal of Universal Studies, 3(7), 1258-1272. https://greenpublisher.id/
Thaler, R. H. (1999). Mental accounting matters. Journal of Behavioral Decision Making, 12(3), 183–206. https://doi.org/10.1002/(SICI)1099-0771(199909)12:3
Zhang, Y., Chen, H., & Malik, A. (2021). Loss aversion and its implications on Islamic investment decisions. Journal of Islamic Finance, 10(1), 88–102. https://doi.org/10.1108/JIF-09-2020-0187
Downloads
Published
Issue
Section
License
SHARE allows the author(s) to hold the copyright and to retain the publishing rights without restrictions. Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License (CC-BY-SA 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgment of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work