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FINANCIAL MANAGEMENT MODEL FOR FORMAL WORKERS IN INDONESIA
Corresponding Author(s) : Novy Karmelita Indrawati
Humanities & Social Sciences Reviews,
Vol. 8 No. 2 (2020): March
Abstract
Purpose of the study: This paper is intended to understand the investment pattern for formal workers in Indonesia. Thus, it is also aimed to provide a specific form of variable construction of productive financial management for workers.
Methodology: This study followed qualitative research by emphasizing the active interaction of the subject and the object of researchers in the form of a discussion to determine the ideas or basic reference model of productive financial management, specifically and focus on each individual form in which the organization is located. The data were gathered using in-depth interviews with respondents in the category of civil servants, state-owned and private employees with lower, middle, and upper-level segregation of interests and reasons for making investment decisions.
Main Findings: The findings showed that the investment decision making for formal sector workers are motivated by benefits and financial security in the future. Their investment decision also considers the income received by individuals in each type of institution. Lastly, technology contributes to change investors’ economic behaviour. The ease of getting information strengthens the motivation of formal sector workers in productive financial management.
Applications of this study: This study provides an investment decision model for formal workers that can be considered ways to enhance the individual understanding of investment.
Novelty/Originality of this study: This study aims to contribute to this growing area of research by exploring investment patterns for formal workers then propose a financial management model for workers.
Keywords
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- Akbar, M., Salman, A., Mughal, K. S., Mehmood, F., & Makarevic, N. (2016). Factors affecting the individual decision making: A case study of Islamabad stock exchange. European Journal of Economic Studies, 15(1), 242-258. https://doi.org/10.13187/es.2016.15.242 DOI: https://doi.org/10.13187/es.2016.15.242
- Anastassiadis, F., Liebe, U., & Mußhoff, O. (2015). Financial flexibility in agricultural investment decisions: A discrete choice experiment. Agricultural Economics Review, 16(1), 47-58.
- Atkinson, A. F., & Messy, F. (2012). Measuring financial literacy: Results of the OECD/ International Network on Financial Education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions, 15, 1–73. https://doi.org/10.1787/5k9csfs90fr4-en DOI: https://doi.org/10.1787/5k9csfs90fr4-en
- Attridge, M. (2009). Measuring and managing employee work engagement: A review of the research and business literature. Journal of Workplace Behavioral Health, 24(4), 383-398. https://doi.org/10.1080/15555240903188398 DOI: https://doi.org/10.1080/15555240903188398
- Bhushan, P. (2014). Relationship between financial literacy and investment behavior of salaried individuals. Journal of Business Management & Social Sciences Research (JBM&SSR), 3(5), 82-87.
- Chandra, A., & Sharma, D. (2010). Investment management by individual investors: A behavioral approach. IUP Journal of Behavioral Finance, 7(1/2), 7-18.
- Chavali, K., & Mohanraj, M. P. (2016). Impact of Demographic variables and Risk Tolerance on Investment Decisions–An Empirical Analysis. International journal of economics and financial issues, 6(1), 169-175.
- De Bortoli, D., da Costa Jr, N., Goulart, M., & Campara, J. (2019). Personality traits and investor profile analysis: A behavioral finance study. PloS one, 14(3), 1-18. https://doi.org/10.1371/journal.pone.0214062 DOI: https://doi.org/10.1371/journal.pone.0214062
- Forbes, J., & Kara, S. M. (2010). Confidence mediates how investment knowledge influences investing self-efficacy. Journal of economic psychology, 31(3), 435-443. https://doi.org/10.1016/j.joep.2010.01.012 DOI: https://doi.org/10.1016/j.joep.2010.01.012
- Gilliam, J., Chatterjee, S., & Zhu, D. (2010). Determinants of risk tolerance in the baby boomer cohort. Journal of Business & Economics Research, 8(5). https://doi.org/10.19030/jber.v8i5.721 DOI: https://doi.org/10.19030/jber.v8i5.721
- Grohmann, A., Kouwenberg, R., & Menkhoff, L. (2014) Financial literacy and its consequences in the emerging middle class. Kiel Working Paper, 1943, 1-49.
- Hope, V. (1989). Virtue by consensus: The moral philosophy of Hutcheson, Hume, and Adam Smith.
- Idris, F. H., Krishnan, K. S. D., & Azmi, N. (2017). Relationship between financial literacy and financial distress among youths in Malaysia-An empirical study. Geografia-Malaysian Journal of Society and Space, 9(4), 106-117.
- Ismail, N., & Zaki, N. D. A. (2019). Does Financial Literacy and Financial Stress Effect The Financial Wellness?. Social Sciences, 2(8), 1-11. https://doi.org/10.35631/IJMTSS.28001 DOI: https://doi.org/10.35631/IJMTSS.28001
- Jain, D., & Mandot, N. (2012). Impact of demographic factors on investment decision of investors in Rajasthan. Researchers World, 3(2), 81-92.
- Jain, D., & Ranawat, K. (2012). The Effect of Demographics on Investment Choice: An Empirical Study of Investors In Rajasthan. Journal of Management and Science, 2(2), 42-61. https://doi.org/10.26524/jms.2012.13 DOI: https://doi.org/10.26524/jms.2012.13
- Kamakia, M. G., Mwangi, C. I., & Mwangi, M. (2017). Financial Literacy and Financial Wellbeing of Public Sector Employees: A Critical Literature Review. European Scientific Journal, 13, 233-249. https://doi.org/10.19044/esj.2017.v13n16p233 DOI: https://doi.org/10.19044/esj.2017.v13n16p233
- Kansal, P., & Singh, S. (2015). Investment behavior of engineers: an empirical study. Researchers World, 6(4), 20-27. https://doi.org/10.18843/rwjasc/v6i4/03 DOI: https://doi.org/10.18843/rwjasc/v6i4/03
- Klapper, L., & Panos, G. A. (2011). Financial Literacy and Retirement Planning in View of Growing Youth Demographic: The Russian Case. CeRP Working Paper. No. 114/11. https://doi.org/10.2139/ssrn.1809723 DOI: https://doi.org/10.2139/ssrn.1809723
- Le, Q. V. (2004). Political and economic determinants of private investment. Journal of International Development, 16(4), 589-604. https://doi.org/10.1002/jid.1109 DOI: https://doi.org/10.1002/jid.1109
- Lusardi, A. (2019). Financial literacy and the need for financial education: evidence and implications. Swiss Journal of Economics and Statistics, 155(1), 1-8. https://doi.org/10.1186/s41937-019-0027-5 DOI: https://doi.org/10.1186/s41937-019-0027-5
- Lusardi, A. & Mitchell, O. S. (2011). Financial literacy around the world: An overview. Journal of Pension Economics and Finance, 10(4), 497-508. https://doi.org/10.1017/S1474747211000448 DOI: https://doi.org/10.1017/S1474747211000448
- Lusardi, A., & Mitchell, O. S. (2017). How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance, 7(3), 1-35. https://doi.org/10.1142/S2010139217500082 DOI: https://doi.org/10.1142/S2010139217500082
- Maski, G. (2012). Analisis keputusan nasabah menabung: pendekatan komponen dan model logistik studi pada bank syariah di Malang. Journal of Indonesian Applied Economics, 4(1), 43-57. https://doi.org/10.21776/ub.jiae.2010.004.01.4 DOI: https://doi.org/10.21776/ub.jiae.2010.004.01.4
- Miles, M. B., Huberman, A. M., & Saldana, J. (1994). Qualitative data analysis: An expanded sourcebook. sage.
- Müller, S., & Weber, M. (2010). Financial literacy and mutual fund investments: who buys actively managed funds?. Schmalenbach Business Review, 62(2), 126-153. https://doi.org/10.1007/BF03396802 DOI: https://doi.org/10.1007/BF03396802
- Rajarajan, V. (2000). Investors'life Styles and Investment Characteristics. Finance India, 14(2), 465-478.
- Shiller, R. J. (1999). Human behavior and the efficiency of the financial system. Handbook of macroeconomics, 1, 1305-1340. https://doi.org/10.1016/S1574-0048(99)10033-8 DOI: https://doi.org/10.1016/S1574-0048(99)10033-8
- Subash, R. (2012). Role of behavioral finance in portfolio investment decisions: Evidence from India. Master Thesis: Charles University in Prague.
- Suresh, N., & Devanathan, S.V. (2012). Empirical Study On Factors Influencing Employees In The Investment Decision Of Pension Fund Scheme In A Public Sector, Interdisciplinary Journal of Contemporary Research In Business, 4(6), 578-591.
- Thaler, R. (1985). Mental accounting and consumer choice. Marketing science, 4(3), 199-214. https://doi.org/10.1287/mksc.4.3.199 DOI: https://doi.org/10.1287/mksc.4.3.199
- Tobin, J. (1989). Growth and distribution: a neoclassical Kaldor—Robinson exercise. Cambridge journal of Economics, 13(1), 37-45.
- Utomo, S. H., Wulandari, D., Narmaditya, B. S., Handayati, P., & Ishak, S. (2019). Macroeconomic factors and LQ45 stock price index: evidence from Indonesia. Investment Management & Financial Innovations, 16(3), 251-259. https://doi.org/10.21511/imfi.16(3).2019.23 DOI: https://doi.org/10.21511/imfi.16(3).2019.23
- Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449-472. https://doi.org/10.1016/j.jfineco.2011.03.006 DOI: https://doi.org/10.1016/j.jfineco.2011.03.006
- Warren, W. E., Stevens, R. E., & McConkey, C. W. (1990). Using demographic and lifestyle analysis to segment individual investors. Financial Analysts Journal, 46(2), 74-77. https://doi.org/10.2469/faj.v46.n2.74 DOI: https://doi.org/10.2469/faj.v46.n2.74
- Wulandari, D., & Narmaditya, B. S. (2018). Triple Helix Model to Improve Financial Literacy of Students in Faculty of Economics. Pertanika Journal of Social Sciences & Humanities, 26(4), 2857-2865.
- Xu, L. & Zia, B. (2012). Financial Literacy around the World: An overview of the evidence with practical suggestions for the way forward. The World Bank Development Research Group. Policy research working paper, 6107, 1 – 56. https://doi.org/10.1596/1813-9450-6107 DOI: https://doi.org/10.1596/1813-9450-6107
References
Akbar, M., Salman, A., Mughal, K. S., Mehmood, F., & Makarevic, N. (2016). Factors affecting the individual decision making: A case study of Islamabad stock exchange. European Journal of Economic Studies, 15(1), 242-258. https://doi.org/10.13187/es.2016.15.242 DOI: https://doi.org/10.13187/es.2016.15.242
Anastassiadis, F., Liebe, U., & Mußhoff, O. (2015). Financial flexibility in agricultural investment decisions: A discrete choice experiment. Agricultural Economics Review, 16(1), 47-58.
Atkinson, A. F., & Messy, F. (2012). Measuring financial literacy: Results of the OECD/ International Network on Financial Education (INFE) pilot study. OECD Working Papers on Finance, Insurance and Private Pensions, 15, 1–73. https://doi.org/10.1787/5k9csfs90fr4-en DOI: https://doi.org/10.1787/5k9csfs90fr4-en
Attridge, M. (2009). Measuring and managing employee work engagement: A review of the research and business literature. Journal of Workplace Behavioral Health, 24(4), 383-398. https://doi.org/10.1080/15555240903188398 DOI: https://doi.org/10.1080/15555240903188398
Bhushan, P. (2014). Relationship between financial literacy and investment behavior of salaried individuals. Journal of Business Management & Social Sciences Research (JBM&SSR), 3(5), 82-87.
Chandra, A., & Sharma, D. (2010). Investment management by individual investors: A behavioral approach. IUP Journal of Behavioral Finance, 7(1/2), 7-18.
Chavali, K., & Mohanraj, M. P. (2016). Impact of Demographic variables and Risk Tolerance on Investment Decisions–An Empirical Analysis. International journal of economics and financial issues, 6(1), 169-175.
De Bortoli, D., da Costa Jr, N., Goulart, M., & Campara, J. (2019). Personality traits and investor profile analysis: A behavioral finance study. PloS one, 14(3), 1-18. https://doi.org/10.1371/journal.pone.0214062 DOI: https://doi.org/10.1371/journal.pone.0214062
Forbes, J., & Kara, S. M. (2010). Confidence mediates how investment knowledge influences investing self-efficacy. Journal of economic psychology, 31(3), 435-443. https://doi.org/10.1016/j.joep.2010.01.012 DOI: https://doi.org/10.1016/j.joep.2010.01.012
Gilliam, J., Chatterjee, S., & Zhu, D. (2010). Determinants of risk tolerance in the baby boomer cohort. Journal of Business & Economics Research, 8(5). https://doi.org/10.19030/jber.v8i5.721 DOI: https://doi.org/10.19030/jber.v8i5.721
Grohmann, A., Kouwenberg, R., & Menkhoff, L. (2014) Financial literacy and its consequences in the emerging middle class. Kiel Working Paper, 1943, 1-49.
Hope, V. (1989). Virtue by consensus: The moral philosophy of Hutcheson, Hume, and Adam Smith.
Idris, F. H., Krishnan, K. S. D., & Azmi, N. (2017). Relationship between financial literacy and financial distress among youths in Malaysia-An empirical study. Geografia-Malaysian Journal of Society and Space, 9(4), 106-117.
Ismail, N., & Zaki, N. D. A. (2019). Does Financial Literacy and Financial Stress Effect The Financial Wellness?. Social Sciences, 2(8), 1-11. https://doi.org/10.35631/IJMTSS.28001 DOI: https://doi.org/10.35631/IJMTSS.28001
Jain, D., & Mandot, N. (2012). Impact of demographic factors on investment decision of investors in Rajasthan. Researchers World, 3(2), 81-92.
Jain, D., & Ranawat, K. (2012). The Effect of Demographics on Investment Choice: An Empirical Study of Investors In Rajasthan. Journal of Management and Science, 2(2), 42-61. https://doi.org/10.26524/jms.2012.13 DOI: https://doi.org/10.26524/jms.2012.13
Kamakia, M. G., Mwangi, C. I., & Mwangi, M. (2017). Financial Literacy and Financial Wellbeing of Public Sector Employees: A Critical Literature Review. European Scientific Journal, 13, 233-249. https://doi.org/10.19044/esj.2017.v13n16p233 DOI: https://doi.org/10.19044/esj.2017.v13n16p233
Kansal, P., & Singh, S. (2015). Investment behavior of engineers: an empirical study. Researchers World, 6(4), 20-27. https://doi.org/10.18843/rwjasc/v6i4/03 DOI: https://doi.org/10.18843/rwjasc/v6i4/03
Klapper, L., & Panos, G. A. (2011). Financial Literacy and Retirement Planning in View of Growing Youth Demographic: The Russian Case. CeRP Working Paper. No. 114/11. https://doi.org/10.2139/ssrn.1809723 DOI: https://doi.org/10.2139/ssrn.1809723
Le, Q. V. (2004). Political and economic determinants of private investment. Journal of International Development, 16(4), 589-604. https://doi.org/10.1002/jid.1109 DOI: https://doi.org/10.1002/jid.1109
Lusardi, A. (2019). Financial literacy and the need for financial education: evidence and implications. Swiss Journal of Economics and Statistics, 155(1), 1-8. https://doi.org/10.1186/s41937-019-0027-5 DOI: https://doi.org/10.1186/s41937-019-0027-5
Lusardi, A. & Mitchell, O. S. (2011). Financial literacy around the world: An overview. Journal of Pension Economics and Finance, 10(4), 497-508. https://doi.org/10.1017/S1474747211000448 DOI: https://doi.org/10.1017/S1474747211000448
Lusardi, A., & Mitchell, O. S. (2017). How ordinary consumers make complex economic decisions: Financial literacy and retirement readiness. Quarterly Journal of Finance, 7(3), 1-35. https://doi.org/10.1142/S2010139217500082 DOI: https://doi.org/10.1142/S2010139217500082
Maski, G. (2012). Analisis keputusan nasabah menabung: pendekatan komponen dan model logistik studi pada bank syariah di Malang. Journal of Indonesian Applied Economics, 4(1), 43-57. https://doi.org/10.21776/ub.jiae.2010.004.01.4 DOI: https://doi.org/10.21776/ub.jiae.2010.004.01.4
Miles, M. B., Huberman, A. M., & Saldana, J. (1994). Qualitative data analysis: An expanded sourcebook. sage.
Müller, S., & Weber, M. (2010). Financial literacy and mutual fund investments: who buys actively managed funds?. Schmalenbach Business Review, 62(2), 126-153. https://doi.org/10.1007/BF03396802 DOI: https://doi.org/10.1007/BF03396802
Rajarajan, V. (2000). Investors'life Styles and Investment Characteristics. Finance India, 14(2), 465-478.
Shiller, R. J. (1999). Human behavior and the efficiency of the financial system. Handbook of macroeconomics, 1, 1305-1340. https://doi.org/10.1016/S1574-0048(99)10033-8 DOI: https://doi.org/10.1016/S1574-0048(99)10033-8
Subash, R. (2012). Role of behavioral finance in portfolio investment decisions: Evidence from India. Master Thesis: Charles University in Prague.
Suresh, N., & Devanathan, S.V. (2012). Empirical Study On Factors Influencing Employees In The Investment Decision Of Pension Fund Scheme In A Public Sector, Interdisciplinary Journal of Contemporary Research In Business, 4(6), 578-591.
Thaler, R. (1985). Mental accounting and consumer choice. Marketing science, 4(3), 199-214. https://doi.org/10.1287/mksc.4.3.199 DOI: https://doi.org/10.1287/mksc.4.3.199
Tobin, J. (1989). Growth and distribution: a neoclassical Kaldor—Robinson exercise. Cambridge journal of Economics, 13(1), 37-45.
Utomo, S. H., Wulandari, D., Narmaditya, B. S., Handayati, P., & Ishak, S. (2019). Macroeconomic factors and LQ45 stock price index: evidence from Indonesia. Investment Management & Financial Innovations, 16(3), 251-259. https://doi.org/10.21511/imfi.16(3).2019.23 DOI: https://doi.org/10.21511/imfi.16(3).2019.23
Van Rooij, M., Lusardi, A., & Alessie, R. (2011). Financial literacy and stock market participation. Journal of Financial Economics, 101(2), 449-472. https://doi.org/10.1016/j.jfineco.2011.03.006 DOI: https://doi.org/10.1016/j.jfineco.2011.03.006
Warren, W. E., Stevens, R. E., & McConkey, C. W. (1990). Using demographic and lifestyle analysis to segment individual investors. Financial Analysts Journal, 46(2), 74-77. https://doi.org/10.2469/faj.v46.n2.74 DOI: https://doi.org/10.2469/faj.v46.n2.74
Wulandari, D., & Narmaditya, B. S. (2018). Triple Helix Model to Improve Financial Literacy of Students in Faculty of Economics. Pertanika Journal of Social Sciences & Humanities, 26(4), 2857-2865.
Xu, L. & Zia, B. (2012). Financial Literacy around the World: An overview of the evidence with practical suggestions for the way forward. The World Bank Development Research Group. Policy research working paper, 6107, 1 – 56. https://doi.org/10.1596/1813-9450-6107 DOI: https://doi.org/10.1596/1813-9450-6107