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CHAPTER I

INTRODUCTION

1.1 Background of Research

Investment can be defined from two perspectives; economic perspective and

finance perspective. According to the economic point of view, investment is the

purchase of capital goods that are not consumed today but for future purposes to

generate income. For example, the purchase of a new machine that will be used in a

factory. Moving on to the finance point of view, investment is a monetary asset

purchased with the expectation that the asset will provide income in the future or

later sold at a higher price for a profit. The monetary asset is varying widely such as;

stocks, bonds, mutual funds, options, future, foreign exchange, gold, property, etc. In

conclusion from both points of views, it means that investment involves a person that

willingly uses their money to contribute to the society regardless of the form of

investment in hope for future benefits.

Like investment, saving is also important for economic growth because the

amount of investment that takes place is limited to the amount of money available to

fund investment projects, which is savings. There is a direct relationship between

savings and investment, and present consumption must be sacrificed. When

investment is increasing, amounts of output can be produced and consumed in the

future is also increasing. This short-run pain but the long-run gain is the root of

economic growth. This theory is proven in Malaysia, one of the countries that

successfully applied this theory. It is shown that FDI, public investment and private

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investment are positively related to GDP (Almsafir & Morzuki, 2015). That is

why investors play a key role in a country’s economic growth.

Figure 1.1 Financial Literacy Index

(Source: OJK)

Since investors plays a key role in a country’s economic growth, thus the

financial literacy on capital market is also important. Overall financial literacy level

of the Indonesian people said to be far behind Malaysia, Singapore, the Philippines

and Thailand (Nur Aini, et al., 2017). As shown in the graph above, the financial

literacy on capital market is the lowest with banking being the highest.

This phenomenon caused by the lack of promotion in the capital market sector

compared to the banking sector which has a lot more player in it. According to the

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central bank of Indonesia (BI) there is 120 bank in Indonesia, which means there

will be 120 times more publicity and promotions in Banking. The only institution

that is responsible to promote capital market is Indonesia Stock Exchange. That is

why to help the promotion of the capital market, IDX launched Yuk Nabung Saham.

Yuk Nabung Saham is a campaign initiated by the Indonesia Stock Exchange

(IDX) to invite the public to invest in the capital market by share saving, which

means buying shares regularly and periodically (yuknabungsaham.idx.co.id). The

objectives of the program are to raise public awareness of the Indonesian Capital

Market and public interest in investing with the ‘Nabung Saham’ mechanism. In

addition to this campaign is also intended to shift the habits of Indonesian people

who initially saved into investing, so that the Indonesian people began to move from

saving society to investing society.

Figure 1.2 Number of Investor

(Source: KSEI)

The program is launched on November 12th, 2015. It has been 3 years since

the program launched. As it depicts in the graph below, in the first year of the

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program (2016) the number of investors are exponentially increasing. The increase

is not only caused by the campaign but also balanced with the education from IDX.

Every time IDX did a tour to promote the campaign, mostly they did education too.

In the first year, the growth is 106% but in the next year (2017), it is decreased to

26%. As of March 2018, the growth is in 8%. If based on 3 months growth and

projected to the end of the year, the growth roughly would be in 33%.

The significant growth in the first year is a good thing for the program, but

later in the second year, the growth significantly decreased which signal the

campaign program may not as efficient as the first year. And the trend may or may

not continue in the third year, which is in 2018. To keep the program as effective as

the first year, it needs another initiative to boost the program. Referring to the

demographic table of investor below, most of the investors are in between age 21 to

50, and with a bachelor degree. IDX needs to target those majorities in order to

increase the number of investor.

Figure 1.3 Investor Demography

(Source: KSEI)

Relating to the facts, Universitas Padjadjaran has an investment subject for

accounting and management department. In this subject, students had given the

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material regarding capital market and investment. Also, there is a Tutor Class which

is an additional class for the students to learn. In tutor class, students learn in depth

theory to analyze the market and when to buy or sell. In Accounting’s tutor class

students asked to conduct a transaction in the capital market based on the theory that

they already thought from the subject. This particular simulation gives a chance for

the students to continue investing or trading which they will become an active

investor. On the other hand, management’s tutor class is not as detailed.

This is aligned with the research conducted by Sulastyawati, et al. (2018),

there is a partially significant relationship between capital market socialization and

education through capital market seminars affecting the respondents' decision to

invest in the capital market. Also based on Maarten & Lusardi (2011) research it

results that financial literacy affects financial decision-making: Those with low

literacy are much less likely to invest in stocks. If it is proven in this research that

trading/investing simulation in classes made the students continue to invest, it can be

correlated to help the Yuk Nabung Saham program. Since it starts as a part of a

subject in university-level education, it is compulsory to all of the students. Later

maybe it can be applied to all other universities in Indonesia, so hopefully, the

capital market literacy can increase significantly.

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According to the research background and the phenomena explained above,

the writer intended to do a research entitled: “External Factors Affecting

Investment Interest on Accounting Students (Comparison study on

Accounting and Management Students of Universitas Padjadjaran)”

1.2 Problem Identification

Based on the stated research background, problem identification is derived to

limit the problems that would be discussed on this research. The proposed problem

identification is as follow:

1. How is the effect of investment tutor class to student investment interest?

2. How is the effect of campaign program to student investment interest?

3. Do investment tutor class and campaign program simultaneously affect

students’ investment interest?

1.3 Research Objectives

Based on the stated problem identification, the purposes of this research are:

1. To identify the effect of investment tutor class on student investment

interest.

2. To identify the effect of campaign program on student investment interest.

3. To test whether investment tutor class and campaign program

simultaneously affect student investment interest.

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1.4 The significance of This Study

The result of this research is expected to be beneficial for students, faculty

academics' body, and the Indonesian Stock Exchange. Considering that the object

being studied in this research significantly involves these parties.

1. Students

This research is expected to give information for accounting and

management students whether there is a correlation between investment tutor

classes to investment interest. Hopefully, this research can make the students

realize the importance of investing.

2. Faculty academics’ body

This study will help faculty academics' body to formulate a strategy for

further improvement regarding investment tutor class. With the information

of present study on the linkages between investment tutor class to student's

intention to invest, the faculty academics' body is expected to gain more

insight on what actually works and efficient for the students.

3. Researchers

The outcome of the study hoped to be beneficial to either present or future

researchers. This study will contribute to the development of Yuk Nabung

Saham program. And for future researchers, the ideas and findings may be

used as reference data in conducting further and new research.

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1.5 Location and Time of Research

This research is using primary data, which use questionnaires as the tool to

gather the data. The questionnaires are distributed to accounting and management

students of Universitas Padjadjaran through online & offline media. The online

media involves online-built questionnaires platforms and the offline involve

gathering the students in a classroom for further explanation. The questionnaires

distribution period are from November until December 2018.