Beyond Access And Lifestyle: Financial Literacy And Locus Of Control As Drivers Of Gen Z Investment Intention In Indonesia

Abstract

Purpose – This study examines the determinants of investment intention among Generation Z in an emerging economy context, integrating behavioral, cognitive, technological, psychological, and managerial factors within an extended Theory of Planned Behavior (TPB) framework. Specifically, it investigates both the direct effects of lifestyle, financial literacy, fintech adoption, locus of control, and financial management on investment intention, as well as the mediating role of financial literacy in translating broader personal attributes into investment intention.

Design/methodology/approach – A quantitative cross-sectional design was employed, with data collected from 283 employed Generation Z respondents aged 18–28 in Greater Tangerang, Indonesia, through a structured online questionnaire using a seven-point Likert scale. Partial Least Squares Structural Equation Modeling (PLS-SEM) with SmartPLS 4 was utilized for analysis, incorporating bootstrapping procedures to test direct and mediated relationships. Common method bias was assessed using Harman's single-factor test.

Findings – The results reveal that financial literacy and internal locus of control emerge as the primary drivers of investment intention, while lifestyle and fintech adoption exhibit no significant direct effects. Financial management behavior demonstrates a counterintuitive negative relationship. Importantly, financial literacy functions as a cognitive mechanism mediating the effects of both lifestyle and locus of control on investment intention, offering a more nuanced understanding of the pathways through which personal attributes translate into financial decision-making.

Practical implications – Financial institutions and policymakers should design integrated educational interventions that simultaneously enhance financial knowledge and strengthen psychological empowerment. Fintech platforms should incorporate educational features to bridge the gap between technological access and financial competence. Investment service providers should develop programs that explicitly link disciplined financial management practices with purposeful investment planning.

Originality/value – This study extends the Theory of Planned Behavior by identifying financial literacy as a mediating mechanism through which lifestyle orientations and psychological attributes influence investment intention, providing novel insights into the cognitive pathways underlying investment decision-making among young adults in emerging economies.

Paper type: Research paper