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Indonesians understand capital markets less despite retail investor boom: OJK
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Trading hub: A woman walks past a large screen displaying Indonesia Stock Exchange (IDX) data in Jakarta on March 9, 2020. (AFP/Adek Berry)
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inancial literacy with regard to capital markets among Indonesians fell in 2022, according to the latest triennial survey from the Financial Services Authority (OJK), leading to concerns that the rapid increase in the number of investors is not commensurate with a rise in the understanding of the associated risks.
Financial literacy measures a set of skills and knowledge that a person needs to make a well-informed financial decision. Investopedia states that people who are financially literate are generally less vulnerable to financial fraud.
Indonesians surveyed by the OJK scored 4.11 percent in financial literacy with regard to capital markets in 2022, marking the lowest level from the last two triennial surveys in 2019 and 2016, which were already stagnant with scores of 4.97 percent and 4.4 percent, respectively.
The OJK's survey questioned 14,634 respondents across 34 provinces with two-thirds of them aged between 20 and 49 years old.
Other financial sectors like banking, insurance, even fintech managed to book at least a 10 percentage point jump in 2022 from their previous triennial surveys.
“The not so good news is literacy [with regard to capital markets] did not go up. That means people, despite their [increased] investment in the capital market, do not have a better understanding of the products,” OJK chairman Mahendra Siregar told the audience at a Nov. 24 event.
“Having 10 million investors in the capital market is simply not enough, the quality of the 10 million [is also important],” he added.
