Financial Literacy and Stock Investment Intention: the Mediating Roles of Financial Self-Efficacy and Risk Perception

Indonesia's capital market has drawn a large wave of young, first-time participants, while national survey data show financial inclusion running ahead of financial literacy. Is financial knowledge associated with market participation on its own, or does that association operate through psychological pathways? Few studies test whether risk perception and financial self-efficacy transmit the association in tandem. A cross-sectional online survey of 287 Indonesian respondents engaged with stock-investment information was analysed using PLS-SEM in SmartPLS 3. Financial literacy was positively associated with both mediators, and both with stock investment intention. The two mediators together transmitted approximately 69% of the total effect (the total indirect effect divided by the total effect, not explained variance), and both indirect pathways held across six alternative specifications, while a small direct association did not survive half of those checks. What links financial understanding to intended participation therefore appears to run through the confidence and risk awareness that accompany it, which points investor education towards combining financial content with attention to confidence and risk calibration. The design is cross-sectional and all measures self-reported, so the findings describe associations rather than causal ordering.