The Influence of Financial Literacy, Financial Behavior, Herding Behavior, and Income on Investment Decision in Jakarta Within the Digital Financial Ecosystem for the Future Investment

Abstract

This research is intended to examine the effect of financial literacy, financial behavior, herding behavior and income on investment decisions in Jakarta. We used PLS-SEM (SmartPLS 4.0) to analyze data collected from 431 survey respondents to conduct this analysis. The results show that financial behavior , herding behavior and income have a significant effect on investment decisions . But financial literacy does not have a significant effect on investment decisions. The findings reveal that herding behaviour is the foremost factor that affects the respondents’ investment decisions which indicate the significance of social influence in investment decisions. The findings can be interpreted in the broader context of the rapidly evolving FinTech and digital banking environment, where investment super-apps, AI advisory services and social trading platforms could potentially amplify behavioral tendencies, although this study does not directly examine variables from the digital financial ecosystem. Thus, these contextual factors are suggested as considerations for future research, rather than as determinants that are tested in the current model. Results show that behavioral and income-related factors are more important than financial knowledge to influence investment decisions.