Effects of Risk-Religion Perception on Millennial’s Risky Financial Asset Holding

Abstract

Perception of risk in the context of how a person considers a decision as a risk, either low or high and how much return they expect to get by holding to a certain level of risk, will influence one's decision-making. Likewise, decisions on ownership of financial assets have different risk spectrums based on the risk-return tradeoff. Religiosity, understanding and practicing religious teachings also influence decision-making, including financial decisions. Religious Muslim investors tend to avoid the ownership of high-risk assets. This paper aims to investigate the relationship between the newly synthesized variables, namely the perception of risk based on religious teachings and the ownership of risky financial assets for young individual investors. For this purpose, using the snowball sampling method, we conducted a survey through distribution of questionnaire and obtained 123 respondents. We then performed correlation analysis and SEM-PLS. The results showed that age is correlated and positively affects asset holding decisions. It means that the older the investor, the greater the ownership of risky assets. However, gender and Risk-Religion Perception (RRP) are correlated and have a significant negative effect. Male investors are more prepared and braver to hold risky assets. These also confirmed that investors who internalize religious teachings are more likely to be risk-averse than risk-neutral.