Factors Toward Risk Influencing Millennials Willingness to Invest in Peer-to-Peer Lending
Keywords:
Financial Literacy, Company Reputation, Information Security Awareness, Risk Perception, Intention to Invest.
Abstract
The objective of this study is to analyze the factors influencing the risk perception that affects millennials' willingness to invest in P2P lending. To achieve this goal, a conceptual model was developed involving variables such as financial literacy, company reputation, information security awareness, risk perception, and intention to invest. The sample consisted of 220 respondents, and data were collected through a questionnaire. Structural Equation Modeling and SmartPLS Statistical Software were used to examine the data. The study’s results suggest that, while financial literacy does not significantly affect risk perception, firm reputation and information security knowledge do. The findings also demonstrate that risk perception has a major impact on the intention to invest. The implications of this research highlight the importance of reputation and information security in shaping risk perception in the fintech sector. Fintech companies should prioritize building a strong reputation through good service, transparency, and authentic communication, as well as implementing robust cybersecurity measures to protect investor data. Financial practitioners also need to educate investors about risks and emphasize the importance of reputation and information security in decision-making, providing guidance in risk assessment and management aligned with investors' goals and risk tolerance.
References
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25. Li, J., Zheng, H., Kang, M., Wang, T., & Chen, S. (2016). Understanding investment intention towards Peer-to-Peer lending: An empirical study. Proceedings of Pacific Asia Conference on Information Systems, 1–17.
26. Malmendier, U., & Nagel, S. (2011). Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?. The Quarterly Journal of Economics, 126(1), 373–416.
27. Baghani, M.R., & Sedaghat, P. (2016). Effect of Risk Perception and Risk Tolerance on Investors' Decision Making in Tehran Stock Exchange. International Academic Journal of Accounting and Financial Management, 1, 79-87.
28. Otoritas Jasa Keuangan. (2022). Statistik Fintech Lending. Retrieved from: https://www.ojk.go.id/id/kanal/iknb/data-dan-statistik/fintech/default.aspx
29. Ong, C., & Chan, C. (2016). The influence of merchant reputation on consumer decisions to shop online. Twenty-Second Americas Conference on Information Systems, 1–10.
30. Puriwigati, A. N. (2020). Sistem Manajemen Basis Data. Retrieved from: https://www.researchgate.net/publication/340779196
31. Rasuma Putri, N. M., & Rahyuda, H. (2017). Pengaruh Tingkat Financial Literacy Dan Faktor Sosiodemografi Terhadap Perilaku Keputusan Investasi individu. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana, 3407.
32. Remund, D. (2010). Financial Literacy Explicated: The Case for a Clearer Definition in an Increasingly Complex Economy. The Journal of Consumer Affairs, 44(2), 276–295.
33. Ryu, H.S. (2018). What makes users willing or hesitant to use Fintech?: the moderating effect of user type. Ind. Manag. Data Syst., 118(3), 541–569.
34. Sashikala, V., & Chitramani, P. (2018). The Impact of Behavioural Factors on Investment Intention of Equity Investors. Asian Journal of Management, 9(1).
35. Schmeiser, M. D., & Seligman, J. S. (2012). Using the right yardstick: Assessing financial literacy measures by way of financial well-being. SSRN Electronic Journal.
36. Servon, Lisa, J., and Kaestner, R. (2008), Consumer Financial Literacy and the Impact of Online Banking on the Financial Behavior of Lower-Income Bank Customers. Journal of Consumer Affairs, 42, 271–305.
37. Shao, Z., & Zhang, L. (2018). Trust building in the mobile payment platform: The moderating effect of gender. Proceedings of Pacific Asia Conference on Information Systems, 1–14.
38. Shehata, S. M., Abdeljawad, A. M., Mazouz, L. A., Aldossary, L. Y. K., Alsaeed, M. Y., & Sayed, M. N. (2021). The moderating role of perceived risks in the relationship between financial knowledge and the intention to invest in the Saudi Arabian stock market. International Journal of Financial Studies, 9(1), 1–16.
39. Sindhu, K. P., & Kumar, S. R. (2014). Influence of risk perception of investors on investment decisions: An empirical analysis. Journal of finance and bank management, 2(2), 15-25.
40. Sinambela, W. P. (2020). Peran Financial Technology dalam Meningkatkan Literasi Keuangan Generasi Millenial di Kota Medan. Seminar Nasional Terapan Riset Inovatif (SENTRINOV), 6(2), 31–48.
41. Sipangkar, H., & Wijaya, C. (2020). Factors affecting intention to investing in Peer-to-Peer lending platform toward Universitas Indonesia students. International Journal of Management, 11(5), 751–763.
42. Stewart, H., & Jürjens, J. (2018). Data security and consumer trust in FinTech innovation in Germany. Information and Computer Security, 26(1), 109–128.
43. Tischer, S., & Hildebrandt, L. (2014). Linking Corporate Reputation and Shareholder Value Using the Publication of Reputation Rankings. Journal of Business Research, 67(5), 1007-1017.
44. Tran, V. D., & Nguyen, T. D. (2022). The impact of security, individuality, reputation, and consumer attitudes on purchase intention of online shopping: The evidence in Vietnam. Cogent Psychology, 9(1).
45. Tsiakis, T. (2012). Consumers’ issues and concerns of perceived risk of information security in online framework. The Marketing Strategies. Procedia - Social and Behavioral Sciences, 62, 1265–1270.
46. Urban, G. L., Sultan, F., & Qualls, W. J. (2001). Placing trust at the center of your internet strategy. MIT Sloan Management Review, 42(1), 39-48.
47. Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449–472.
48. Waheed, H., Ahmed, Z., Saleem, Q., Mohy-Ul-Din, S., & Ahmed, B. (2020). The mediating role of risk perception in the relationship between financial literacy and investment decision. International Journal of Innovation, Creativity and Change, 14(4), 112–131.
49. Wang, M., Wang, T., Kang, M., & Sun, S. (2014). Understanding Perceived Platform Trust and Institutional Risk in Peer-to-Peer Lending Platforms from Cognition-Based and Affect-Based Perspectives. Proceedings. Pacific Asia Conference on Information Systems, PACIS, 208.
50. Zhang, X., Wuwong, N., & Li, H. (2010). Information security risk management framework for the cloud computing environments. Proceedings - 10th IEEE International Conference on Computer and Information Technology, CIT-2010, 7th IEEE International Conference on Embedded Software and Systems, ICESS-2010, ScalCom-2010, 1328–1334.
2. Ainia, Nur, N.S., and Lutfi, L. (2019). The influence of risk perception, risk tolerance, overconfidence, and loss aversion towards investment decision-making. Journal of Economics, Business & Accountancy Ventura, 21, 401–13.
3. Ajzen, I. (1991). The theory of planned behavior. Organizational Behavior and Human Decision Processes, 50(2), 179–211.
4. Abubakar, L., & Handayani, T. (2018). Financial Technology: Legal Challenges for Indonesia Financial Sector. IOP Conf. Ser. Earth Environ. Sci., 175, 1–6.
5. Amelia, E. A. (2019). Pengaruh Capital Adequacy Ratio (CAR), Inflasi dan Financing to Deposit Ratio (FDR) terhadap non-Performing Financing (NPF) pada Bank Umum Syariah Periode 2015-2017. Jurnal Intelektualita: Keislaman, Sosial, dan Sains.
6. Aren, S., & Zengin, A. N. (2016). Influence of financial literacy and risk Perception on choice of investment. Social and Behavioral Sciences, 235, 656–663.
7. Arias-Oliva, M., Pelegrín-Borondo, J., & Matías-Clavero, G. (2019). Variables influencing cryptocurrency use: A technology acceptance model in Spain. Frontiers in Psychology, 10(MAR).
8. Bank Indonesia (2022). Laporan Suvey Permintaan dan Penawaran Pembiayaan Perbankan Agustus 2022. Retrieved from: https://www.bi.go.id/id/covid19/Documents/Laporan_Survei_Pembiayaan_Perbankan_Agustus_2022.pdf#search=fintech
9. Bruggink, D., & Mouilleron, E. (2017). Success factors for the deployment of financial technology: An interview with Eric Mouilleron. Journal of Payments Strategy & Systems, 10(4).
10. Carpena, F., Cole, S., Shapiro, J., & Zia, B. (2019). The ABCs of Financial Education: Experimental Evidence on Attitudes, Behavior, and Cognitive Biases. Management Science, 65(1), 346–369.
11. Diana, N., & Leon, F. M. (2020), Factors Affecting Continuance Intention of FinTech Payment among Millennials in Jakarta. European Journal of Business and Management Research, 5(4).
12. Ferreira, M. (2018). Cross-country Differences in Risk Attitudes towards Financial Investment. Retrieved from: https://voxeu.org/article/cross-country-differences-risk-attitudes-towards-financial-investment
13. Featherman, M. S., & Pavlou, P. A. (2003). Predicting e-services adoption: A perceived risk facets perspective. International Journal of Human Computer Studies, 59(4), 451–474.
14. Ghasemaghaei, M., & Hassanein, K. (2016). A macro model of online information quality perceptions: A review and synthesis of the literature. Computers in Human Behavior, 55, 972–991.
15. Goldstein, I., Jiang, W., & Karolyi, G. A. (2019). To FinTech and beyond. In Review of Financial Studies. Oxford University Press.
16. Gusni, Tamtama, H. E., Aniza, Adriani, N. K., & Razualdi, M. (2020). Effect of financial literacy, motivation, and perceived risk on students investment interest. Solid State Technology, 63(4), 4229–4238.
17. Hair, J., Ringle, C. and Sarstedt, M. (2011) PLS-SEM: Indeed a Silver Bullet. Journal of Marketing Theory and Practice, 19, 139-151.
18. Hair, J. F., Risher, J. J., Sarstedt, M., & Ringle, C. M. (2019) When to Use and How to Report the Results of PLS-SEM. European Business Review, 31, 2-24.
19. Heaton, J., & Lucas, D. (2000). Portfolio choice and asset prices: The Importance of Entrepreneurial Risk. The Journal of Finance, 55(3), 1163–1198.
20. Hermansson, C., & Jonsson, S. (2021). The impact of financial literacy and financial interest on risk tolerance. Journal of Behavioral and Experimental Finance, 29.
21. Hograrth, J. M., & Hilgert, M. A. (2002). Financial Knowledge, Experience and Learning Preferences: Preliminary Results from a New Survey on Financial Literacy. Consumer Interest Annual, 48.
22. Horne, C. A., Ahmad, A., & Maynard, S. B. (2016). A Theory on Information Security. Australasian Conference on Information Systems.
23. Huston, S. J. (2010). Measuring financial literacy. The Journal of Consumer Affairs, 44(2), 296–316.
24. Jonsson, S., Soderber, I., & Wilhelmsson, M. (2017). An investigation of the impact of financial literacy, risk attitude, and saving motives on the attenuation of mutual fund investors’ disposition bias. Managerial Finance, 43(3), 282–298.
25. Li, J., Zheng, H., Kang, M., Wang, T., & Chen, S. (2016). Understanding investment intention towards Peer-to-Peer lending: An empirical study. Proceedings of Pacific Asia Conference on Information Systems, 1–17.
26. Malmendier, U., & Nagel, S. (2011). Depression Babies: Do Macroeconomic Experiences Affect Risk Taking?. The Quarterly Journal of Economics, 126(1), 373–416.
27. Baghani, M.R., & Sedaghat, P. (2016). Effect of Risk Perception and Risk Tolerance on Investors' Decision Making in Tehran Stock Exchange. International Academic Journal of Accounting and Financial Management, 1, 79-87.
28. Otoritas Jasa Keuangan. (2022). Statistik Fintech Lending. Retrieved from: https://www.ojk.go.id/id/kanal/iknb/data-dan-statistik/fintech/default.aspx
29. Ong, C., & Chan, C. (2016). The influence of merchant reputation on consumer decisions to shop online. Twenty-Second Americas Conference on Information Systems, 1–10.
30. Puriwigati, A. N. (2020). Sistem Manajemen Basis Data. Retrieved from: https://www.researchgate.net/publication/340779196
31. Rasuma Putri, N. M., & Rahyuda, H. (2017). Pengaruh Tingkat Financial Literacy Dan Faktor Sosiodemografi Terhadap Perilaku Keputusan Investasi individu. E-Jurnal Ekonomi Dan Bisnis Universitas Udayana, 3407.
32. Remund, D. (2010). Financial Literacy Explicated: The Case for a Clearer Definition in an Increasingly Complex Economy. The Journal of Consumer Affairs, 44(2), 276–295.
33. Ryu, H.S. (2018). What makes users willing or hesitant to use Fintech?: the moderating effect of user type. Ind. Manag. Data Syst., 118(3), 541–569.
34. Sashikala, V., & Chitramani, P. (2018). The Impact of Behavioural Factors on Investment Intention of Equity Investors. Asian Journal of Management, 9(1).
35. Schmeiser, M. D., & Seligman, J. S. (2012). Using the right yardstick: Assessing financial literacy measures by way of financial well-being. SSRN Electronic Journal.
36. Servon, Lisa, J., and Kaestner, R. (2008), Consumer Financial Literacy and the Impact of Online Banking on the Financial Behavior of Lower-Income Bank Customers. Journal of Consumer Affairs, 42, 271–305.
37. Shao, Z., & Zhang, L. (2018). Trust building in the mobile payment platform: The moderating effect of gender. Proceedings of Pacific Asia Conference on Information Systems, 1–14.
38. Shehata, S. M., Abdeljawad, A. M., Mazouz, L. A., Aldossary, L. Y. K., Alsaeed, M. Y., & Sayed, M. N. (2021). The moderating role of perceived risks in the relationship between financial knowledge and the intention to invest in the Saudi Arabian stock market. International Journal of Financial Studies, 9(1), 1–16.
39. Sindhu, K. P., & Kumar, S. R. (2014). Influence of risk perception of investors on investment decisions: An empirical analysis. Journal of finance and bank management, 2(2), 15-25.
40. Sinambela, W. P. (2020). Peran Financial Technology dalam Meningkatkan Literasi Keuangan Generasi Millenial di Kota Medan. Seminar Nasional Terapan Riset Inovatif (SENTRINOV), 6(2), 31–48.
41. Sipangkar, H., & Wijaya, C. (2020). Factors affecting intention to investing in Peer-to-Peer lending platform toward Universitas Indonesia students. International Journal of Management, 11(5), 751–763.
42. Stewart, H., & Jürjens, J. (2018). Data security and consumer trust in FinTech innovation in Germany. Information and Computer Security, 26(1), 109–128.
43. Tischer, S., & Hildebrandt, L. (2014). Linking Corporate Reputation and Shareholder Value Using the Publication of Reputation Rankings. Journal of Business Research, 67(5), 1007-1017.
44. Tran, V. D., & Nguyen, T. D. (2022). The impact of security, individuality, reputation, and consumer attitudes on purchase intention of online shopping: The evidence in Vietnam. Cogent Psychology, 9(1).
45. Tsiakis, T. (2012). Consumers’ issues and concerns of perceived risk of information security in online framework. The Marketing Strategies. Procedia - Social and Behavioral Sciences, 62, 1265–1270.
46. Urban, G. L., Sultan, F., & Qualls, W. J. (2001). Placing trust at the center of your internet strategy. MIT Sloan Management Review, 42(1), 39-48.
47. Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449–472.
48. Waheed, H., Ahmed, Z., Saleem, Q., Mohy-Ul-Din, S., & Ahmed, B. (2020). The mediating role of risk perception in the relationship between financial literacy and investment decision. International Journal of Innovation, Creativity and Change, 14(4), 112–131.
49. Wang, M., Wang, T., Kang, M., & Sun, S. (2014). Understanding Perceived Platform Trust and Institutional Risk in Peer-to-Peer Lending Platforms from Cognition-Based and Affect-Based Perspectives. Proceedings. Pacific Asia Conference on Information Systems, PACIS, 208.
50. Zhang, X., Wuwong, N., & Li, H. (2010). Information security risk management framework for the cloud computing environments. Proceedings - 10th IEEE International Conference on Computer and Information Technology, CIT-2010, 7th IEEE International Conference on Embedded Software and Systems, ICESS-2010, ScalCom-2010, 1328–1334.
Published
2024-02-02
How to Cite
Sisilia, H., Bustan, S. O., Lestadi, A. K., & Gunadi, W. (2024). Factors Toward Risk Influencing Millennials Willingness to Invest in Peer-to-Peer Lending. International Journal of Science and Society, 6(1), 695-708. https://doi.org/10.54783/ijsoc.v6i1.1056
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Articles
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