Effect Of Investment, Return, And Risk Knowledge On Investment Investment In Capital Market (Case Study Of Students Of The Faculty Of Economics And Business, University Of North Sumatra)

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Effect of Investment Knowledge, Return, and Risk on Student Interest in Investing in the Capital Market

Introduction

The Indonesian capital market has experienced significant growth in recent years, with the number of investors increasing steadily. However, despite this growth, the total number of investors remains relatively small compared to the country's population. One of the key factors influencing investment interest in the capital market is the relatively higher risk associated with it compared to other investment instruments. This study aims to analyze the effect of investment knowledge, returns, and risks on investment in the capital market, specifically among students of the Faculty of Economics and Business, University of North Sumatra.

Background

The capital market plays a crucial role in the development of a country's economy, providing a platform for investors to buy and sell securities. However, the capital market is also associated with a higher level of risk compared to other investment instruments. This risk can be a significant deterrent for potential investors, particularly among students who may not have a deep understanding of the capital market. Therefore, it is essential to understand the factors that influence investment interest in the capital market, particularly among students.

Literature Review

Previous studies have highlighted the importance of investment knowledge, returns, and risks in influencing investment decisions. Investment knowledge is critical in helping investors make informed decisions about their investments. Returns, on the other hand, play a significant role in determining the attractiveness of an investment. Risks, however, can be a significant deterrent for potential investors. Despite the importance of these factors, there is a lack of research on the effect of investment knowledge, returns, and risks on student interest in investing in the capital market.

Research Methodology

This study employed a quantitative approach using a simple random sampling technique to select a sample of 324 students from the Faculty of Economics and Business, University of North Sumatra. The population consisted of students registered in the 2017-2019 academic year, with a total of 1,699 people. Data analysis was carried out using multiple linear analysis to measure the relationship between existing variables, namely investment knowledge, return, and risk, to student investment interests.

Research Results

The results of the study showed that simultaneously, investment knowledge, return, and risk had a significant influence on the interest of students to invest in the capital market. Further analysis partially revealed that:

Investment Knowledge

  • Investment knowledge has a positive and significant impact on student investment interests. This shows that the higher students' knowledge about investment, the greater their interest in investing in the capital market. This reflects the importance of education and in-depth understanding of investment for the younger generation.
  • Investment knowledge is critical in helping students make informed decisions about their investments. Students with a higher level of investment knowledge are more likely to be interested in investing in the capital market.

Return

  • Return has a positive and significant effect on investment interest. That is, higher return expectations can increase the interest of students to invest. This shows that students tend to be interested in investing if they believe that the investment will provide attractive benefits.
  • Return is a critical factor in determining the attractiveness of an investment. Students with higher return expectations are more likely to be interested in investing in the capital market.

Risk

  • Risk has a negative and significant effect on investment interest. This shows that fears of a greater risk can reduce the interest of students to invest in the capital market.
  • Risk is a significant deterrent for potential investors. Students who are risk-averse are less likely to be interested in investing in the capital market.

Conclusion

This study revealed the importance of investment knowledge and good return expectations to encourage students' interest in investing in the capital market. Meanwhile, attention to the risks that may arise needs to be increased, to reduce the worry that can hamper their participation in investing. By understanding the effect of these variables, the university and other educational institutions can design a better educational program in supporting the younger generation to become an intelligent and wise investor.

Implications

The findings of this study have several implications for the university and other educational institutions. Firstly, the university should design a better educational program that focuses on investment knowledge and risk management. This program should aim to equip students with the necessary skills and knowledge to make informed decisions about their investments. Secondly, the university should provide students with opportunities to gain practical experience in investing, such as through internships or investment clubs. This will help students to develop their investment skills and build their confidence in investing.

Limitations

This study has several limitations. Firstly, the study only focused on students of the Faculty of Economics and Business, University of North Sumatra. Therefore, the findings may not be generalizable to other students or populations. Secondly, the study only used a simple random sampling technique, which may not be representative of the population. Finally, the study only used a quantitative approach, which may not capture the complexities of investment decisions.

Future Research Directions

This study provides several avenues for future research. Firstly, future studies should aim to replicate the study using a larger and more diverse sample. Secondly, future studies should use a mixed-methods approach to capture the complexities of investment decisions. Finally, future studies should explore the role of other factors, such as family background and socioeconomic status, in influencing investment interest in the capital market.

References

  • [1] World Bank. (2020). Indonesia: Capital Market Development.
  • [2] Indonesian Stock Exchange. (2020). Annual Report.
  • [3] Faculty of Economics and Business, University of North Sumatra. (2020). Student Handbook.

Appendices

  • Appendix A: Research Questionnaire
  • Appendix B: Data Analysis Procedure
  • Appendix C: Results of Data Analysis
    Frequently Asked Questions (FAQs) about the Effect of Investment Knowledge, Return, and Risk on Student Interest in Investing in the Capital Market

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of investment knowledge, returns, and risks on investment in the capital market, specifically among students of the Faculty of Economics and Business, University of North Sumatra.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the factors that influence investment interest in the capital market, particularly among students. The findings of this study can help educational institutions design better educational programs to support the younger generation in becoming intelligent and wise investors.

Q: What is the research methodology used in this study?

A: This study employed a quantitative approach using a simple random sampling technique to select a sample of 324 students from the Faculty of Economics and Business, University of North Sumatra. Data analysis was carried out using multiple linear analysis to measure the relationship between existing variables, namely investment knowledge, return, and risk, to student investment interests.

Q: What are the key findings of this study?

A: The key findings of this study are:

  • Investment knowledge has a positive and significant impact on student investment interests.
  • Return has a positive and significant effect on investment interest.
  • Risk has a negative and significant effect on investment interest.

Q: What are the implications of this study?

A: The findings of this study have several implications for the university and other educational institutions. Firstly, the university should design a better educational program that focuses on investment knowledge and risk management. Secondly, the university should provide students with opportunities to gain practical experience in investing, such as through internships or investment clubs.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the study only focused on students of the Faculty of Economics and Business, University of North Sumatra. Therefore, the findings may not be generalizable to other students or populations. Secondly, the study only used a simple random sampling technique, which may not be representative of the population. Finally, the study only used a quantitative approach, which may not capture the complexities of investment decisions.

Q: What are the future research directions?

A: This study provides several avenues for future research. Firstly, future studies should aim to replicate the study using a larger and more diverse sample. Secondly, future studies should use a mixed-methods approach to capture the complexities of investment decisions. Finally, future studies should explore the role of other factors, such as family background and socioeconomic status, in influencing investment interest in the capital market.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

  • Educational institutions should design better educational programs that focus on investment knowledge and risk management.
  • Students should be provided with opportunities to gain practical experience in investing, such as through internships or investment clubs.
  • Investors should be aware of the risks associated with investing in the capital market and take steps to mitigate those risks.

Q: What are the policy implications of this study?

A: The policy implications of this study are:

  • Governments should provide support for educational institutions to design better educational programs that focus on investment knowledge and risk management.
  • Governments should provide incentives for students to gain practical experience in investing, such as through internships or investment clubs.
  • Governments should implement policies to reduce the risks associated with investing in the capital market and provide support for investors to mitigate those risks.

Q: What are the future directions for research in this area?

A: The future directions for research in this area are:

  • Replicating the study using a larger and more diverse sample.
  • Using a mixed-methods approach to capture the complexities of investment decisions.
  • Exploring the role of other factors, such as family background and socioeconomic status, in influencing investment interest in the capital market.

Q: What are the potential applications of this study?

A: The potential applications of this study are:

  • Educational institutions can use the findings of this study to design better educational programs that focus on investment knowledge and risk management.
  • Investors can use the findings of this study to make informed decisions about their investments.
  • Governments can use the findings of this study to implement policies that support the development of the capital market and reduce the risks associated with investing in the capital market.