The effect of behavioral finance and financial literacy on investment intentions among Indonesian investors

This research uses the Theory of planned behavior (TPB) in analyzing the effect of behavioral finance and financial literacy toward investment intention in Indonesian investors. This study aims to analyze whether behavioral finance (overconfidence, excessive optimism, psychology of risk, and herding behavior) and perceived investment of significant others significantly affect attitude toward investment behavior. This study also aims to understand the effect of attitude toward investment behavior, perceived investment of significant others, and perceived behavioral control (subjective financial literacy, objective financial literacy, and financial well-being), on investment intention. The study took as samples, investors who have been investing in the capital market for at least 6 months and are currently holding stock(s). The data was processed by using Partial Least Square Structural Equation Modeling (PLS-SEM). The result of this study found that overconfidence, excessive optimism, psychology of risk, and perceived investment of significant others significantly affect attitude toward investment behavior. While, herding behavior does not have a significant effect on attitude toward investment behavior. This study also found that perceived investment of significant others and financial well-being do not have a significant effect on investment intention, while attitude toward investment behavior, subjective financial literacy, and objective financial literacy significantly affect investment intention.