Analysis of Factors Affecting Investment Decisions in the Indonesian Capital Market

Abstract

This study analyzes the factors influencing investment decisions in the Indonesian capital market. Investment decisions are critical to both individual investors and market stability, as they reflect investor confidence and market dynamics. The research examines the role of fundamental factors such as return, risk perception, financial literacy, behavioral biases, and macroeconomic indicators. Data were collected through a survey of active investors across various Indonesian stock exchanges and analyzed using multiple regression techniques. The findings indicate that return expectations, financial literacy, and risk tolerance significantly influence investment choices. Meanwhile, behavioral factors such as overconfidence and herding behavior also play a substantial role. The study highlights the need for investor education and the development of transparent financial information systems to enhance decision quality. These insights are vital for policymakers, investment advisors, and stakeholders aiming to strengthen capital market participation in Indonesia