Do Financial Influencers Help or Harm Young Investors? A Dual-Process Model of Financial Literacy, Herd Behaviour, and Investment Intention

Financial influencers (“finfluencers”) have become central information intermediaries in retail capital markets, above all among Generation Z. Drawing on Dual-Process Theory, this study argues that finfluencer exposure functions as a double-edged sword, activating deliberative (System 2) and intuitive (System 1) cognition through two competing mediating pathways: financial literacy and perceived herd behaviour. Using data from 300 Generation-Z respondents in Bali, Indonesia, collected through an online questionnaire and analysed with Partial Least Squares–Structural Equation Modelling (PLS-SEM) in SmartPLS 4, we test a parallel mediation model. Bootstrapping with 5000 subsamples confirms all five hypothesised relationships (β range 0.255 to 0.812; all p < 0.001). The two mediating pathways operate at comparable magnitudes (indirect effects: 0.249 for literacy and 0.256 for herding), producing a total indirect effect (0.505) that far exceeds the direct effect (0.255), indicative of complementary partial parallel mediation. R2 values indicate moderate explanatory power (R2 for investment intention = 0.660) and satisfactory predictive relevance (Q2predict > 0 for all endogenous constructs). Our findings advance the dual-process literature in behavioural finance by empirically distinguishing cognitive from social-behavioural mechanisms through which digital information sources shape retail investment intention. The results underscore the need for content-based regulation of finfluencers, targeted digital financial literacy programmes, and platform design interventions that dampen social-proof cues in financial content.