Determinants of Financial Literacy Index Improvement in Indonesia: A Psychosocial Approach Study on the Young Generation

Abstract

As one of the indicators of the human development index, financial literacy in Indonesia still shows a fairly low number. Financial literacy index data in Indonesia based on the results of the National Survey of Literacy and Finance (SNLIK) successively in 2013, 2016, 2019, and 2022 are at 21.84%, 29.70%, 38.03%, and 49.68%4. This study aims to find the determinants of increasing the financial literacy index in Indonesia by using a psychosocial approach that is believed to provide a new perspective in solving research problems. The research method used a quantitative research design with a sample size of 203 respondents in Denpasar, Bali, and Malang, East Java, focusing on the age level in the younger generation category. The results showed that the need for cognition has a significant effect on financial literacy, and helplessness has a significant effect on financial literacy. Furthermore, the results also show that the social environment does not moderate the effect of the need for cognition and helplessness on financial literacy