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Risk Behavior and Investment Decisions: The Mediating Roles of Priority, Strategy, and Culture among Indonesian Retail Investors

  • Maheni Ika Sari1
  • Rendy Mirwan Aspirandi2*
  • Zihan Safira3
  • Viko Febrian4
1,2,3,4 Universitas Muhammadiyah Jember image/svg+xml
* Corresponding Author: Rendy Mirwan Aspirandi

Abstract

This study analyzes the effect of Risk Capacity (objective financial ability to bear risk), Risk Tolerance (psychological willingness to accept risk), and Risk Propensity (inherent disposition toward risk) on Investment Decisions. Using a quantitative explanatory design, data from 100 Indonesian retail investors selected through purposive sampling were analyzed with SEM-PLS via SmartPLS. SEM-PLS was chosen due to its predictive capability and ability to handle complex, non-normal data. All constructs met the criteria for convergent validity, discriminant validity, and reliability, with Cronbach's Alpha exceeding 0.70, while an R² value of 0.622 indicates that the model explains 62.20% of the variance in Investment Decisions. The results show that Risk Capacity has no significant effect on Investment Decisions, either directly or through the mediating variables, suggesting that objective financial capability is not the dominant determinant of investment behavior. In contrast, Risk Tolerance significantly influences Investment Decisions through Investment Priority, Investment Strategy, and Culture in a full mediation pattern. Practically, these findings suggest that financial advisors and policymakers should focus on translating investors' psychological risk tolerance into structured investment priorities and strategies, rather than relying solely on objective financial capacity.

Keywords

Risk Capacity Risk Tolerance Risk Propensity Investment Decisions Culture Behavioral Finance SEM-PLS

How to Cite

Citation Format
Sari, M. I., Aspirandi, R. M., Safira, Z., & Febrian, V. (2026). Risk Behavior and Investment Decisions: The Mediating Roles of Priority, Strategy, and Culture among Indonesian Retail Investors. International Journal of Management Science and Information Technology, 6(2), 3159-3173. https://doi.org/10.35870/ijmsit.v6i2.8914

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Author Biographies

Maheni Ika Sari, Universitas Muhammadiyah Jember

Management Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Jember, Jember Regency, East Java Province, Indonesia

Rendy Mirwan Aspirandi, Universitas Muhammadiyah Jember

Accounting Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Jember, Jember Regency, East Java Province, Indonesia

Zihan Safira, Universitas Muhammadiyah Jember

Management Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Jember, Jember Regency, East Java Province, Indonesia

Viko Febrian, Universitas Muhammadiyah Jember

Accounting Study Program, Faculty of Economics and Business, Universitas Muhammadiyah Jember, Jember Regency, East Java Province, Indonesia

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Copyright (c) 2026 Maheni Ika Sari, Rendy Mirwan Aspirandi, Zihan Safira, Viko Febrian

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This work is licensed under a Creative Commons Attribution 4.0 International License.

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