Investor Preference Toward Sharia Financial Products.

Abstract

Investor Preference Toward Sharia Financial Products is a research about investor behavior which explains factors influencing investment decision. In essential, how the behavior pattern of investor describes about what, why, and how to invest. This research is useful for financial institutions to help in analyzing investor need. Investor need can be learned through investment decision process. Furthermore, this research also useful as investors reference in determining investment decision. This research aims to describe the development of sharia financial investment in Indonesia and to compare between sharia financial products and conventional financial products, and to analyze factors influencing investor preference of sharia financial investment. This research was based on primary and secondary data. Primary data have been obtained through a structure questionaire. The sample size was 87 and the respondents were consisted of participant and non participant of sharia capital market school in Jakarta. The secondary data have been collected from various books, journals, and websites. The sampling technique followed in this research is purposive sampling. In order to analyze the collected data, the following tools were used. Descriptive analysis is used to describe the development of sharia financial investment in Indonesia and the comparison between sharia financial products and conventional financial product. Logit analysis is used to analyze factors influencing sharia financial investment compared to conventional financial investment. Afterward, multinomial logit is used to analyze factors influencing sharia mutual fund, sharia deposit, sharia insurance, and dinar compared to sharia stock. The result of the logit model shows that the factor influencing investor preference toward sharia financial investment is the level of knowledge. If the level of knowledge increases, then the investors will prefer to put their fund in sharia financial investment than conventional financial investment. This is because that to have a knowledge about sharia financial theory, is the initial process in determining investment decision. Therefore, the level of knowledge positively correlated with investor preference in sharia financial investment. Multinomial logit model indicates that the participation of sharia capital market school influences toward investment preference in sharia financial products. So it’s hoped to the institution related to sharia capital market and other sharia financial institutions to increase literacy program about sharia financial investment. Beside that, the level of saving shows significant influence toward sharia insurance preference, which the investors with a higher saving more prefer to put most of their funds in sharia stock than to put in sharia mutual fund and sharia insurance. Afterward, the level of education also shows a significant relation toward sharia insurance preference, which the investors with a higher education tend to take more risk and consequently they prefer to invest in sharia stock than sharia insurance. This result also suggest that age of respondent correlates with the investment preference of sharia mutual fund, which the young investor tend to have their money in sharia stock than sharia mutual fund.