The Effect of Social Media Financial Influence on Investment Decision Overconfidence Among Gen Z Investors in Jakarta

Abstract

This study aims to examine the effect of social media financial influence on investment decision overconfidence among Generation Z investors in Jakarta, addressing a theoretical and empirical gap left unresolved by prior studies that examined social learning and overconfidence bias mechanisms separately rather than as a unified causal pathway. A quantitative explanatory design was employed, using a structured online questionnaire distributed to 200 Gen Z investors (aged 17–28) domiciled in Jakarta, yielding 133 valid responses (66.5% response rate). Data were analysed using simple linear regression in SPSS, following instrument validity and reliability testing and classical assumption tests. Social media financial influence was found to have a positive and significant effect on investment decision overconfidence (β = 0.447; t = 5.250; p < 0.001), explaining 17.4% of the variance (R² = 0.174). Notably, elevated overconfidence was more pronounced among investors with less than one year of market experience, suggesting that exposure-driven confidence can form more rapidly than experience-based confidence. This study contributes by synthesising Social Learning Theory and Overconfidence Bias Theory into a single sequential mechanism, demonstrating that finfluencer exposure functions as a vicarious pathway to overconfidence distinct from experience-based bias formation documented in classical behavioural finance literature. Findings suggest regulators and digital investment platforms should move beyond generic financial literacy programmes toward finfluencer competency disclosure and behaviourally-triggered risk warnings targeting novice investors. This study is limited by its cross-sectional design, direct-effect model without mediating/moderating variables, and geographic scope confined to Jakarta, warranting longitudinal and multi-context replication.