Journal of Islamic Economics Lariba

(P-ISSN 2477-4839 E-ISSN 2528-3758)

2024, Vol. 10, No. 2, 1205-1240
https://doi.org/10.20885/jielariba.vol10.iss2.art28

Analysis of factors affecting the satisfaction of

Sharia stock investors in Bangka Belitung and
Riau, Indonesia
Firman Abadi & Muhammad Adi Wicaksono

Program Studi Ekonomi Islam (S1), Universitas Islam Indonesia, Yogyakarta, Indonesia

ABSTRAK
Introduction JEL Classification:
L21, L26, L84, Z12
The Indonesian Sharia stock market has experienced significant
growth, reflecting increasing demand for ethical investment options KAUJIE Classification:
that align with Islamic principles. Despite this expansion, limited C54, H42, H65, P0
research has explored the factors influencing investor satisfaction in
ARTICLE HISTORY:
Sharia-compliant markets, particularly the role of behavioral traits and
Submitted: December 27, 2024
financial literacy alongside adherence to Sharia values.
Revised: December 31, 2024
Objectives Accepted: December 31, 2024
Published: December 31, 2024
This study examines the interplay between Sharia values, financial
literacy, behavioral traits (overconfidence, self-efficacy, herding KEYWORDS:
behavior, and risk tolerance), and investment decisions in determining
behavioral finance; ethical
investor satisfaction in the Indonesian Sharia stock market. investing; financial literacy;
investor satisfaction; Sharia
Method
stock market
A quantitative explanatory research design was employed, gathering
data from 151 individual Sharia stock investors in Bangka Belitung and COPYRIGHT © 2024 Firman
Riau provinces through online surveys. Structural Equation Modeling Abadi & Muhammad Adi
Wicaksono. Licensee
(SEM) was used to analyze relationships among variables, including
Universitas Islam Indonesia,
sharia values, behavioral traits, financial literacy, investment decisions, Yogyakarta, Indonesia.
and investor satisfaction.

Results
The findings reveal that sharia values are the strongest determinant of
investor satisfaction, emphasizing the importance of ethical
alignment. Behavioral traits, particularly overconfidence and self-
efficacy, positively influence investment decisions mediating
satisfaction. Financial literacy, herding behavior, and risk tolerance
exhibit limited or indirect effects on satisfaction, highlighting the
complex dynamics of Sharia-compliant investing.

Implications
The study underscores the critical role of ethical principles and
behavioral traits in shaping satisfaction within sharia markets. It
provides practical insights for financial institutions, policymakers, and

Contact: Muhammad Adi Wicaksono [email protected]

This is an Open Access article distributed under the terms of the Creative Commons Attribution-ShareAlike 4.0 International (CC
BY-SA 4.0) License (https://creativecommons.org/licenses/by-sa/4.0/).
PUBLISHER’S NOTE: Universitas Islam Indonesia stays neutral with regard to jurisdictional claims in published maps and
institutional affiliations.
1206 Abadi & Wicaksono

educators to design more effective investment strategies and

educational programs.

Originality/Novelty
This research integrates behavioral finance and Sharia principles,
contributing to the growing literature on ethical investing. The study
offers a comprehensive framework for understanding investor
satisfaction, providing a foundation for future research and practical
applications in Sharia-compliant markets.

CITATION: Abadi, F. & Wicaksono, M. A. (2024). Analysis of factors

affecting the satisfaction of Sharia stock investors in Bangka Belitung
and Riau, Indonesia. Journal of Islamic Economics Lariba, 10(2), 1205-
1240. https://doi.org/10.20885/jielariba.vol10.iss2.art28

INTRODUCTION

The rapid growth of the Sharia stock market in Indonesia has been a hallmark of the
nation’s evolving financial landscape. As among largest Muslim-majority countries in
the world, Indonesia's financial industry has embraced sharia principles to align with
the ethical and religious expectations of its investors. The Sharia stock market, governed
by Islamic principles that prohibit activities like usury and investment in non-halal
industries, offers an ethical alternative to conventional markets. With increasing
investor participation, the demand for understanding the dynamics that influence
investor satisfaction in this sector has grown substantially. This growing interest reflects
a broader global trend in ethical investing, as investors seek not only financial returns
but also alignment with personal and societal values (Hamimah et al., 2024; Suwandi,
2024; Taufik & Rusmana, 2023; Ulinnuha et al., 2020).
Despite this growth, the literature on Sharia stock investment remains
underdeveloped compared to conventional stock markets. Research in behavioral
finance reveals that investment decisions are shaped by a combination of
psychological, social, and economic factors (Gorgievski & Stephan, 2016; Hastings &
Mitchell, 2020; Hoff & Stiglitz, 2016; Ridley et al., 2020; Thaler, 2016; Zahera & Bansal, 2018).
Factors like overconfidence, risk tolerance, herding behavior, and financial literacy have
been extensively studied in conventional markets but remain underexplored in the
context of sharia investments. Meanwhile, sharia-specific factors, such as compliance
with ethical principles and the role of religiosity, add an additional layer of complexity.
These dynamics highlight the need for a deeper understanding of how sharia values
and behavioral factors influence investment satisfaction.
The primary challenge in this field lies in identifying the drivers of investor
satisfaction in sharia stock markets. Satisfaction is a multidimensional construct
influenced by both tangible and intangible factors. On one hand, financial outcomes,
such as returns and portfolio performance, are key determinants of satisfaction. On the
other hand, intangible factors, such as ethical alignment, perceived fairness, and
psychological comfort, play an equally critical role. Current research suggests that
sharia values, when effectively integrated into investment practices, can significantly
enhance satisfaction by reinforcing trust and ethical alignment. However, the precise
 Satisfaction of Sharia stock investors 1207

mechanisms through which these values influence satisfaction remain unclear,

necessitating further investigation.
In addressing this research challenge, behavioral finance provides a useful lens.
Overconfidence (Bouteska & Regaieg, 2018; Grežo, 2020; Hatoum, 2021; Kumar & Prince,
2023; Pikulina et al., 2017), self-efficacy (Farrell et al., 2016; Kuhnen & Melzer, 2018; Liu &
Zhang, 2021; Lone & Bhat, 2024; Montford & Goldsmith, 2016), and herding behavior (M.
Ahmad & Wu, 2022; Chang & Lin, 2015; Metawa et al., 2018; Mittal, 2019; Shantha, 2019)
have been shown to impact investment decisions in conventional markets. Investors
with high self-efficacy and overconfidence often exhibit proactive decision-making
and greater resilience to market fluctuations. However, herding behavior, characterized
by following the majority without independent analysis, can undermine decision quality.
Risk tolerance, another key factor, determines an investor’s willingness to accept
volatility and uncertainty. While these factors are well-documented in conventional
markets, their relevance and influence in Sharia-compliant contexts require further
exploration. Financial literacy also plays a critical role in shaping decisions, as it equips
investors with the knowledge to evaluate opportunities and manage risks effectively.
Previous studies on Sharia investment have highlighted the importance of ethical
compliance in building investor trust. For instance, previous studies (Boulanouar et al.,
2024; Hardana et al., 2024; Saratian et al., 2024) found that adherence to Sharia
principles significantly influences investor satisfaction by fostering a sense of security
and alignment with personal values. Similarly, other studies (Evanthi et al., 2023; Iqbal
et al., 2023; Ugbala et al., 2023) underscored the role of financial literacy in enhancing
decision-making and satisfaction. However, these studies often treat behavioral factors
and Sharia values as separate constructs, overlooking their potential interplay. This gap
suggests the need for an integrated approach that examines how these variables
interact to influence satisfaction.
The literature on behavioral finance in sharia contexts is still emerging, with limited
empirical evidence on key factors like overconfidence, herding behavior, and risk
tolerance. Previous studies (Muhammad et al., 2022; Sapkota, 2022; Sapkota & Chalise,
2023) provide valuable insights into the psychological drivers of investment behavior
but do not fully capture the unique dynamics of sharia markets. Moreover, while
financial literacy is frequently discussed, its relationship with behavioral factors and
sharia values remains underexplored. These gaps highlight the need for a
comprehensive framework that integrates behavioral finance theories with sharia-
specific principles.
This study aims to fill these gaps by investigating the factors that influence investor
satisfaction in the Indonesian sharia stock market. Specifically, it examines the roles of
sharia values, financial literacy, overconfidence, self-efficacy, herding behavior, risk
tolerance, and investment decisions. The novelty of this research lies in its integrated
approach, which combines behavioral finance and sharia principles to provide a
holistic understanding of investor satisfaction. By applying Structural Equation Modeling
(SEM) to data collected from 151 respondents, the study offers empirical insights into the
interplay between these variables.
1208 Abadi & Wicaksono

The scope of this research extends beyond academic contributions, offering

practical implications for policymakers, financial institutions, and investors.
Understanding the drivers of satisfaction can help stakeholders design more effective
investment products, improve investor education, and promote ethical investment
practices. Furthermore, this study provides a foundation for future research on sharia-
compliant investments, encouraging the development of more sophisticated
frameworks that capture the complexity of this growing market. By addressing these
objectives, the study contributes to the broader discourse on ethical investing and the
role of sharia principles in shaping financial markets.

LITERATURE REVIEW

Sharia Values in Investment Practices

Sharia-compliant investment practices are grounded in ethical principles derived from
Islamic teachings, which prohibit elements such as usury (riba), uncertainty (gharar),
and investments in non-halal industries. These principles prioritize transparency,
fairness, and societal benefit, making sharia investments not only a financial endeavor
but also an ethical commitment. The integration of sharia values fosters trust among
investors by ensuring that their financial activities align with their religious and ethical
beliefs (Kafou, 2025; Taufik & Rusmana, 2023; Tawfik et al., 2024). In this context, Sharia
values serve as a guiding framework for investment decision-making, influencing both
the selection of assets and overall satisfaction with investment outcomes.
While traditional financial models often emphasize risk-return trade-offs, Sharia
investments extend this focus to include ethical considerations. Previous studies
highlight that Sharia values promote long-term stability by encouraging responsible
investment practices and discouraging speculative behavior (Busneti et al., 2023;
Haseeb et al., 2023; Sandwick & Collazzo, 2021). However, despite their theoretical
appeal, the operationalization of sharia principles in contemporary markets poses
challenges, particularly in ensuring compliance and maintaining transparency. These
challenges underscore the need for empirical studies that evaluate the practical
impact of sharia values on investor behavior and satisfaction.

Behavioral Finance and Investment Decisions

Behavioral finance explores the psychological and emotional factors that influence
financial decision-making. Unlike traditional finance theories, which assume rationality,
behavioral finance acknowledges that cognitive biases and emotional responses often
drive investment choices. Key behavioral factors, such as overconfidence, self-efficacy,
herding behavior, and risk tolerance, have been extensively studied in conventional
markets, offering valuable insights into investor behavior.

1. Overconfidence
Overconfidence, defined as an investor's overestimation of their knowledge or
ability, often leads to excessive trading and risk-taking. While this trait can result
in proactive decision-making, it may also cause suboptimal outcomes when not
 Satisfaction of Sharia stock investors 1209

tempered by rational analysis. Previous studies (Hashmi et al., 2023; Seraj et al.,
2022; Syifa, 2023) suggest that overconfidence can enhance investment
decisions in sharia contexts by fostering a sense of control and reducing
hesitation. However, its impact on satisfaction remains underexplored,
particularly when balanced against the ethical constraints of sharia principles.
2. Self-Efficacy
Self-efficacy, or the belief in one’s ability to achieve desired outcomes, is another
critical factor influencing investment decisions. High self-efficacy has been
linked to proactive behavior, resilience, and improved decision-making. In sharia
markets, self-efficacy may play a unique role by empowering investors to
navigate complex ethical requirements. Self-efficacy enhances financial
literacy, enabling investors to align their decisions with both financial goals and
ethical principles (Afandy et al., 2023; Hasanudin et al., 2022).
3. Herding Behavior
Herding behavior, characterized by mimicking the actions of others, is a
common phenomenon in financial markets. While it can provide a sense of
security, excessive herding often undermines independent analysis and leads to
market inefficiencies. In the context of sharia investments, herding behavior may
conflict with the emphasis on informed and ethical decision-making (Aziz et al.,
2022; Bougatef & Nejah, 2022; Fitriyani & Anwar, 2022; Hussain et al., 2023). Al-
Tamimi & Kalli (2009) highlight the dual nature of herding, suggesting that its
impact depends on the quality of the decisions being mimicked.
4. Risk Tolerance
Risk tolerance, or the willingness to accept uncertainty in pursuit of financial
returns, is a fundamental determinant of investment behavior. In sharia markets,
risk tolerance is shaped by both financial considerations and ethical constraints,
such as the prohibition of speculative investments (Adams et al., 2023; Alam et
al., 2023). Rahman & Arsyianti (2021) argue that Sharia-compliant investors
exhibit moderate risk tolerance, balancing their pursuit of returns with the need
for stability and ethical alignment.

Financial Literacy and Investor Behavior

Financial literacy, defined as the ability to understand and apply financial concepts,
plays a pivotal role in shaping investment decisions and satisfaction. High financial
literacy enables investors to evaluate opportunities, manage risks, and make informed
decisions. In sharia markets, financial literacy extends beyond conventional knowledge
to include an understanding of sharia principles and compliance requirements (G. N.
Ahmad et al., 2020; Maruf & Yuliadi, 2023; Zakiyah et al., 2023).
Previous studies also highlight that financial literacy enhances the ability to assess
the ethical implications of investment choices (Lusardi, 2019; Stolper & Walter, 2017),
fostering alignment with personal and religious values (Akaka & Schau, 2019; Astrachan
et al., 2020). However, the relationship between financial literacy and satisfaction is not
always straightforward. While greater knowledge can improve decision-making, it may
1210 Abadi & Wicaksono

also increase expectations, leading to potential dissatisfaction if outcomes fall short.

This nuanced relationship underscores the importance of considering financial literacy
as both an enabler and a potential source of complexity in investment behavior.

Investor Satisfaction in Sharia Markets

Investor satisfaction is a multifaceted construct influenced by financial performance
(Eklof et al., 2020; Fornell et al., 2016), ethical alignment (Balvers et al., 2016; Cheng et al.,
2015; Diouf et al., 2016), and psychological factors (Asebedo & Payne, 2019; Haritha P H
& Rishad, 2020; Sahi, 2017). In sharia markets, satisfaction is particularly shaped by the
integration of ethical values, which enhance trust and reduce cognitive dissonance
(Begam et al., 2024; Rafisah Mat Radzi, 2022). Satisfaction in sharia investments extends
beyond financial returns to include the fulfillment of ethical and spiritual goals.
The interplay between satisfaction and behavioral factors, such as overconfidence
and herding behavior, is an emerging area of research. Previous studies suggest that
while overconfidence can enhance satisfaction by reinforcing a sense of control,
excessive herding may undermine it by reducing the perceived autonomy of decisions.
Similarly, self-efficacy has been shown to positively influence satisfaction by
empowering investors to align their actions with their values.

Gaps in the Literature

Despite significant progress in understanding behavioral finance and sharia principles,
gaps remain in the integration of these domains. Most studies treat behavioral factors
and sharia values as separate constructs, overlooking their potential interplay. For
instance, the impact of overconfidence on satisfaction in sharia contexts has been
minimally explored, and the role of financial literacy in mediating this relationship
remains unclear.
Moreover, while existing research highlights the importance of ethical alignment in
sharia investments, it often lacks empirical evidence on the practical mechanisms
through which this alignment influences behavior and satisfaction. The role of cultural
and contextual factors, such as regional differences in sharia interpretation, is another
area requiring further investigation.

Integrating Behavioral Finance and Sharia Principles

To address these gaps, an integrated approach that combines behavioral finance
theories with sharia principles is essential. Such an approach can provide a more
comprehensive understanding of investor behavior and satisfaction in sharia markets.
Previous studies provide a foundation for this integration but fall short of offering a
holistic framework.
This study seeks to fill these gaps by examining the interplay between sharia values,
behavioral factors, and financial literacy in shaping investor satisfaction. By employing
a mixed-methods approach and leveraging tools like Structural Equation Modeling
(SEM), the research aims to provide empirical insights into these relationships. The
findings are expected to contribute to both academic knowledge and practical
 Satisfaction of Sharia stock investors 1211

applications, offering valuable guidance for investors, policymakers, and financial

institutions.

METHOD

Research Design
This study employed a quantitative explanatory research design to investigate the
factors influencing investor satisfaction in the Indonesian sharia stock market. The
explanatory design was chosen to examine the relationships between variables,
including sharia values, financial literacy, overconfidence, self-efficacy, herding
behavior, risk tolerance, investment decisions, and investor satisfaction. By leveraging
statistical analysis, the study aimed to validate hypotheses and provide empirical
insights into the dynamics of investor behavior in a sharia-compliant context.

Population and Sampling

The population for this study consisted of individual investors actively participating in
the sharia stock market in Indonesia, specifically those residing in Bangka Belitung and
Riau provinces. These regions were selected due to their high levels of investor
engagement in sharia-compliant investments. A purposive sampling technique was
utilized to select participants who met specific criteria, such as active investment in
sharia stocks for at least six months and familiarity with sharia investment principles. A
total of 151 respondents were included in the final sample, ensuring a representative mix
of demographic characteristics, including age, gender, and education level.

Data Collection
Data were collected through structured online surveys designed to capture information
about the variables of interest. The survey instrument consisted of multiple sections,
each addressing a specific construct. The questions were designed to be clear and
concise, minimizing response bias. The survey was distributed through email and social
media platforms to reach a broad audience of eligible participants.

Instrumentation
Validated measurement scales were used to ensure the reliability and validity of the
data collected. Each construct was measured using established instruments adapted
for the study context:

1. Sharia Values: Participants’ perceptions of the importance and application of

sharia principles in their investment decisions were measured using a scale
developed for ethical investment studies.
2. Financial Literacy: A standardized financial literacy scale assessed participants’
knowledge and understanding of financial concepts, including investment risks,
returns, and sharia compliance.
3. Behavioral Factors: Overconfidence, self-efficacy, herding behavior, and risk
tolerance were measured using scales from previous studies in behavioral
1212 Abadi & Wicaksono

finance. These scales included Likert-type items to capture the intensity of each
behavior.
4. Investment Decisions: A custom scale was developed to evaluate the quality and
frequency of investment decisions, with a focus on adherence to sharia
principles.
5. Investor Satisfaction: Satisfaction levels were measured using a multi-item scale
that assessed participants’ contentment with financial outcomes, ethical
alignment, and overall investment experience.

The survey instrument was pre-tested with a pilot group of 20 investors to ensure
clarity and reliability. Feedback from the pilot study was used to refine the survey before
full deployment.

Data Analysis
Data were analyzed using Structural Equation Modeling (SEM), a robust statistical
technique that allows for the simultaneous analysis of multiple variables and their
relationships. SEM was conducted using Smart PLS 3.0 and 4.0 software, which enabled
the assessment of measurement models and structural paths.

1. Descriptive Analysis: Basic descriptive statistics, including means, standard

deviations, and frequencies, were calculated to provide an overview of the
sample characteristics and responses.
2. Measurement Model Validation: The reliability and validity of the constructs were
assessed through confirmatory factor analysis (CFA). Composite reliability and
Cronbach’s alpha values were examined to ensure internal consistency, while
average variance extracted (AVE) values were used to confirm convergent
validity. Discriminant validity was tested using the Fornell-Larcker criterion.
3. Structural Model Evaluation: Path analysis was conducted to test the
relationships between variables. The significance of each path coefficient was
determined through bootstrapping with 5,000 resamples. The model’s overall fit
was evaluated using indicators such as the coefficient of determination (R2) and
predictive relevance (Q2).
4. Hypothesis Testing: Each hypothesis was tested based on the significance and
direction of the path coefficients. Hypotheses with pp-values below 0.05 were
considered supported.

Ethical Considerations
Ethical approval for the study was obtained from the relevant institutional review board.
Participants were informed about the study’s objectives and provided with assurances
of confidentiality and anonymity. Participation was voluntary, and respondents could
withdraw at any time without penalty. Informed consent was obtained before data
collection.
 Satisfaction of Sharia stock investors 1213

RESULTS

Respondents Profile
The study analyzed data from 151 respondents, predominantly sharia stock investors
from Bangka Belitung and Riau provinces. The demographic profile of respondents is
presented in Table 1. The descriptive analysis showed that most respondents were from
the province of Bangka Belitung, with 101 respondents accounting for 66.9%, followed by
Riau Province with 50 respondents, comprising 33.1% of the total respondents. Regarding
the respondents' distribution by city or district, Pangkalpinang had the highest
representation, with 71 respondents (47.0%). Pekanbaru followed with 30 respondents
(19.9%), while other areas like Bangka, Belitung, Central Bangka, South Bangka, Rokan
Hilir, Rokan Hulu, Indragiri Hulu, Kampar, and Lingga had lower frequencies, each below
10%.

Table 1

Respondents Profile

Demographic Attribute Category Frequency Percentage

Province Bangka Belitung 101 66.9%
Riau 50 33.1%
City/District Pangkalpinang 71 47.0%
Bangka 15 9.9%
Belitung 3 2.0%
Central Bangka 6 4.0%
South Bangka 6 4.0%
Pekanbaru 30 19.9%
Rokan Hilir 9 6.0%
Rokan Hulu 5 3.3%
Indragiri Hulu 3 2.0%
Kampar 2 1.3%
Lingga 1 0.7%
Gender Male 78 51.7%
Female 73 48.3%
Age < 20 years old 17 11.3%
20 – 23 years old 90 59.6%
24 – 30 years old 37 24.5%
31 – 40 years old 5 3.3%
41 – 50 years old 1 0.7%
> 60 years old 1 0.7%
Marital Status Single 131 86.8%
Married 19 12.6%
Previously Married 1 0.7%
Religion Islam 135 89.4%
Protestant Christian 5 3.3%
Catholic Christian 2 1.3%
Buddhism 6 4.0%
Confucianism 3 2.0%
Education Level Elementary/Middle School 1 0.7%
High School/Vocational 59 39.1%
1214 Abadi & Wicaksono

Demographic Attribute Category Frequency Percentage

Diploma (D3) 1 0.7%
Bachelor's Degree (S1) 87 57.6%
Master's Degree (S2) 3 2.0%
Occupation Student/University Student 38 25.2%
Freelance 6 4.0%
Indonesian Police (POLRI) 2 1.3%
Teacher 1 0.7%
Others 104 68.8%
Monthly Income ≤ Rp. 2,000,000 71 47.0%
Rp. 2,000,001 – Rp. 4,000,000 53 35.1%
Rp. 4,000,001 – Rp. 7,000,000 20 13.2%
Rp. 7,000,001 – Rp. 9,000,000 3 2.0%
> Rp. 9,000,000 4 2.6%
Securities Firms Indo Premier Securities 46 30.5%
Ajaib Sekuritas Asia 27 17.9%
Mirae Asset Sekuritas 3 2.0%
BCA Sekuritas 14 9.3%
Not Disclosed 11 7.3%
Other Firms 50 33.1%
Investment Duration < 6 months 62 41.1%
6 – 12 months 40 26.5%
1 – 2 years 42 27.8%
3 – 5 years 5 3.3%
> 6 years 2 1.3%
Investment Pattern 100% Conventional Investment 37 24.5%
100% Sharia-compliant Investment 36 23.8%
Mixed (Conventional and Sharia) 78 51.7%
SOTS Usage Ever used 64 42.4%
Never used 87 57.6%
Source: Primary data. Authors’ estimation.

The gender analysis revealed a relatively balanced distribution, with male

respondents slightly outnumbering females. Males comprised 51.7% (78 respondents),
while females made up 48.3% (73 respondents). The majority of respondents belonged
to the age group of 20 to 23 years old (59.6%, 90 respondents). This was followed by the
24–30 years age bracket with 24.5% (37 respondents). Smaller percentages were
represented by respondents under 20 years old and those aged 31 years and above,
each below 12%. An overwhelming majority of respondents were single (86.8%, 131
respondents). Married respondents made up only 12.6% (19 respondents), and a very
small fraction, 0.7%, were previously married.
In terms of religion, respondents were predominantly Muslim, comprising 89.4% (135
respondents). Other religions represented included Protestant Christianity (3.3%),
Buddhism (4.0%), Catholic Christianity (1.3%), and Confucianism (2.0%). Most
respondents had attained a bachelor's degree (57.6%, 87 respondents), while 39.1% had
completed high school or vocational school. Only a small proportion of respondents
held either a diploma (0.7%) or a master's degree (2.0%). Respondents came from
diverse fields of study, primarily related to economics, business, and social sciences.
 Satisfaction of Sharia stock investors 1215

However, detailed data on respondents’ fields of study are not fully provided in the
available tables.
Occupational data indicated that most respondents (68.8%, 104 respondents) were
employed in fields categorized as "others," reflecting diverse employment backgrounds.
Students or university students were also notably represented (25.2%, 38 respondents),
followed by freelancers, police officers, and teachers with smaller percentages. Nearly
half of respondents (47.0%, 71 respondents) had a monthly income of Rp 2,000,000 or
less. Those earning between Rp 2,000,001 to Rp 4,000,000 represented 35.1%, while
higher-income groups were less common, each comprising less than 14%.
The respondents predominantly used Indo Premier Securities (30.5%, 46
respondents) for their investments, followed by Ajaib Sekuritas Asia (17.9%, 27
respondents), and BCA Sekuritas (9.3%, 14 respondents). Mirae Asset Sekuritas and other
unspecified firms had smaller representations. Most respondents were relatively new
investors, with 41.1% (62 respondents) having invested for less than six months. Another
significant portion, 27.8%, had been investing for one to two years, while a smaller
number (4.6%) had more than three years of investment experience.
The respondents mostly preferred a mixed investment approach, combining both
conventional and sharia-compliant investments (51.7%, 78 respondents). Purely
conventional investors represented 24.5%, and purely sharia-compliant investors
accounted for 23.8%. Analysis of Sharia Online Trading System (SOTS) usage revealed
that the majority of respondents (57.6%, 87 respondents) had never used the platform.
Conversely, 42.4% (64 respondents) had experience using SOTS for trading sharia-
compliant stocks.

Descriptive Statistics
Tabel 2 presents descriptive statistics of variables for this study. The Sharia value
variable reveals consistently high mean scores, indicating that respondents generally
perceive Islamic principles as important in guiding their investment behaviors.
Specifically, items related to aligning investments with Sharia compliance and ethical
standards received mean scores slightly above 4, highlighting strong awareness and
adherence among investors toward Islamic investment ethics.

Table 2

Descriptive Statistics of Variables

Variable Indicator N Min Max Mean Std. Deviation

Sharia Value (X1) X1.1 151 1 5 4.07 0.843
X1.2 151 1 5 4.09 0.83
X1.3 151 1 5 4.00 0.906
X1.4 151 1 5 4.04 0.898
Investment Literacy Perception (X2) X2.1 151 1 5 4.25 0.805
X2.2 151 1 5 3.76 0.77
X2.3 151 1 5 4.09 0.861
X2.4 151 1 5 4.23 0.741
Risk Tolerance (X3) X3.1 151 1 5 3.58 0.986
X3.2 151 1 5 2.88 1.067
1216 Abadi & Wicaksono

Variable Indicator N Min Max Mean Std. Deviation

X3.3 151 1 5 3.04 1.060
X3.4 151 1 5 3.20 1.017
Overconfidence (X4) X4.1 151 1 5 3.83 0.753
X4.2 151 1 5 3.42 0.902
X4.3 151 1 5 3.15 1.078
X4.4 151 1 5 2.98 1.064
X4.5 151 1 5 3.11 1.000
Herding Behavior (X5) X5.1 151 1 5 3.50 0.993
X5.2 151 1 5 3.58 0.982
X5.3 151 1 5 3.48 1.011
X5.4 151 1 5 3.53 0.972
Self-Efficacy (X6) X6.1 151 1 5 3.95 0.840
X6.2 151 1 5 3.88 0.841
X6.3 151 1 5 3.93 0.791
X6.4 151 1 5 3.89 0.818
Investment Decisions (Y1) Y1.1 151 1 5 4.07 0.783
Y1.2 151 1 5 4.15 0.797
Y1.3 151 1 5 4.07 0.844
Y1.4 151 1 5 4.04 0.819
Investor Satisfaction (Y2) Y2.1 151 1 5 4.15 0.812
Y2.2 151 1 5 4.07 0.865
Y2.3 151 1 5 4.10 0.821
Y2.4 151 1 5 4.04 0.879
Source: Primary data. Authors’ estimation.

Regarding Investment Literacy Perception, respondents show a relatively strong

understanding of investment fundamentals, especially seen in the high mean scores
(above 4) for items related to investment awareness and knowledge acquisition.
Nevertheless, the slightly lower mean (3.76) in understanding financial statements
reflects areas needing enhancement to ensure more effective decision-making in
investment contexts.
Risk tolerance scores were moderate, averaging around 3, suggesting a balanced
approach to risk among respondents. Lower scores on certain indicators, such as the
willingness to endure significant financial losses, demonstrate a cautious mindset
prevalent among investors. This moderation reflects careful consideration and
balanced investment decisions rather than high-risk strategies.
Investor Overconfidence displayed varied scores across different items.
Respondents showed relatively high confidence (3.8) in their personal investment
knowledge but expressed moderate to lower confidence regarding their ability to
consistently outperform market averages. The variance implies that investors possess
a certain confidence level but remain reasonably aware of their limitations in predicting
market outcomes accurately.
Finally, the analysis of Herding Behavior indicates moderate mean scores around
3.5, reflecting tendencies among respondents to sometimes rely on the investment
actions and decisions of others. Although not extreme, these scores suggest that peer
 Satisfaction of Sharia stock investors 1217

influence occasionally affects investment decisions, demonstrating moderate

susceptibility to collective investment behaviors.

Measurement Model (Outer Model) Evaluation

Convergent Validity
The convergent validity test results after the first item drop in Table 3 demonstrated that
all indicators for each variable possess satisfactory outer loadings, with values
exceeding the recommended threshold of 0.70. Specifically, the Sharia Value variable
showcased exceptionally high loadings between 0.921 and 0.931, underscoring robust
construct validity. Similarly, Investment Literacy and Risk Tolerance variables
maintained strong validity, with loadings ranging from 0.705 to 0.899, indicating that
these indicators reliably measure their respective constructs.

Table 3

Convergent Validity Test (Outer Loading after First Drop)

Variable Indicator Outer Loading Explanation

Sharia Value (X1) X1.1 0.921 Valid
X1.2 0.931 Valid
X1.3 0.904 Valid
X1.4 0.880 Valid
Investment Literacy (X2) X2.1 0.834 Valid
X2.2 0.861 Valid
X2.3 0.705 Valid
X2.4 0.729 Valid
Risk Tolerance (X3) X3.1 0.880 Valid
X3.2 0.868 Valid
X3.3 0.899 Valid
Overconfidence (X4) X4.1 0.882 Valid
X4.2 0.914 Valid
X4.3 0.851 Valid
Herding Behavior (X5) X5.1 0.843 Valid
X5.2 0.888 Valid
X5.3 0.875 Valid
Self-Efficacy (X6) X6.1 0.814 Valid
X6.2 0.870 Valid
X6.3 0.818 Valid
X6.4 0.861 Valid
Investment Decisions (Y1) Y1.1 0.862 Valid
Y1.2 0.812 Valid
Y1.3 0.794 Valid
Y1.4 0.844 Valid
Investor Satisfaction (Y2) Y2.1 0.854 Valid
Y2.2 0.882 Valid
Y2.3 0.825 Valid
Y2.4 0.881 Valid
Source: Primary data. Authors’ estimation.
1218 Abadi & Wicaksono

Moreover, behavioral factors such as Overconfidence, Herding Behavior, and Self-

Efficacy exhibited high validity levels, reflected in outer loadings between 0.814 and
0.914. Likewise, Investment Decisions and Investor Satisfaction displayed consistent and
valid indicators, with loadings from 0.794 to 0.882. Collectively, these results confirm that
each construct is well-defined by its indicators, ensuring reliable measurement and
accurate representation of respondents' perceptions and behaviors in investment
contexts.
The convergent validity test results, represented by the Average Variance Extracted
(AVE) in Table 4, confirmed that all constructs have achieved satisfactory validity,
exceeding the threshold of 0.5. The highest AVE was observed in the Sharia Value
construct (0.828), highlighting its strong validity in accurately measuring investor
adherence to Islamic investment principles. Similarly, Investment Literacy and Risk
Tolerance also demonstrated robust validity, with AVE values of 0.584 and 0.767
respectively, confirming that these constructs are well-measured by their indicators.

Table 4

Construct Validity Test (AVE)

Variable Average Variance Extracted (AVE) Critical Value Conclusion

Sharia Value (X1) 0.828 0.500 Valid
Investment Literacy (X2) 0.584 0.500 Valid
Risk Tolerance (X3) 0.767 0.500 Valid
Overconfidence (X4) 0.747 0.500 Valid
Herding Behavior (X5) 0.737 0.500 Valid
Self-Efficacy (X6) 0.707 0.500 Valid
Investment Decisions (Y1) 0.679 0.500 Valid
Investor Satisfaction (Y2) 0.712 0.500 Valid
Source: Primary data. Authors’ estimation.

Moreover, the Overconfidence, Herding Behavior, and Self-Efficacy variables also

showed solid construct validity, with AVE values of 0.747, 0.737, and 0.707 respectively.
The Investment Decision and Investor Satisfaction variables similarly reflected strong
AVE values (0.679 and 0.712), further indicating reliable measurement of the respective
constructs. Overall, these AVE values exceed the critical threshold of 0.5, providing
strong evidence of valid and reliable constructs within the research model.
Discriminant Validity
The discriminant validity test assessed through cross-loading analysis demonstrated
that each indicator had higher correlations with its respective construct than with other
constructs. The outer loading values for all indicators met the validity criteria, with the
highest loading scores observed within their designated latent variables, clearly
indicating strong discriminant validity.
Overall, the cross-loading results confirm that indicators used in this study
effectively differentiate each construct from one another, thus validating the
discriminant nature of the measurement model. This ensures that each variable is
distinctively measured and appropriately reflects unique aspects within the theoretical
 Satisfaction of Sharia stock investors 1219

framework, supporting robust and precise measurement for further structural model
analysis.

Table 5

Discriminant Validity Test (Cross Loading)

Indicator X1 X2 X3 X4 X5 X6 Y1 Y2 Max Loading Conclusion

X1.1 0.921 0.386 0.045 0.007 0.119 0.405 0.353 0.425 0.921 Valid
X1.2 0.931 0.464 0.091 0.05 0.173 0.44 0.42 0.467 0.931 Valid
X1.3 0.895 0.458 0.057 0.053 0.16 0.378 0.365 0.497 0.895 Valid
X1.4 0.892 0.396 0.097 -0.039 0.125 0.354 0.382 0.436 0.892 Valid
X2.1 0.42 0.782 0.154 0.034 0.03 0.291 0.377 0.218 0.782 Valid
X2.2 0.334 0.833 0.288 0.354 0.07 0.364 0.444 0.359 0.833 Valid
X2.3 0.311 0.705 0.376 0.128 0.359 0.195 0.295 0.196 0.705 Valid
X2.4 0.42 0.729 0.154 0.169 0.117 0.385 0.375 0.173 0.729 Valid
X3.1 0.091 0.306 0.991 0.436 0.39 0.104 0.164 0.286 0.991 Valid
X3.2 0.001 0.311 0.743 0.436 0.331 0.03 0.033 0.146 0.743 Valid
X4.1 0.4 0.138 0.365 0.882 0.362 0.196 0.397 0.361 0.882 Valid
X4.2 0.032 0.202 0.436 0.914 0.433 0.243 0.294 0.173 0.914 Valid
X4.3 0.314 0.126 0.417 0.851 0.388 0.119 0.299 0.232 0.851 Valid
X4.4 0.239 0.121 0.413 0.808 0.369 0.195 0.305 0.141 0.808 Valid
X5.2 0.095 0.192 0.33 0.426 0.888 0.2 0.344 0.245 0.888 Valid
X5.3 0.212 0.142 0.31 0.411 0.843 0.138 0.276 0.116 0.843 Valid
X5.4 0.095 0.179 0.296 0.364 0.843 0.242 0.299 0.182 0.843 Valid
X6.1 0.362 0.334 0.122 0.174 0.145 0.814 0.551 0.42 0.814 Valid
X6.2 0.29 0.303 0.06 0.122 0.117 0.828 0.514 0.48 0.828 Valid
X6.3 0.338 0.371 0.053 0.149 0.243 0.859 0.617 0.486 0.859 Valid
X6.4 0.397 0.404 0.165 0.189 0.306 0.862 0.622 0.56 0.862 Valid
Source: Primary data. Authors’ estimation.

Reliability Tests
The results presented in Table 6 summarize the reliability analysis using both
Cronbach’s Alpha and composite reliability criteria. According to the testing standards,
a variable is deemed reliable if the composite reliability value is above 0.6 and
Cronbach’s alpha exceeds 0.7. From the table, it is clear that all variables exhibited a
composite reliability value ranging from 0.848 to 0.951, comfortably surpassing the
minimum reliability threshold of 0.6. This indicates that all constructs used in this
research can be considered highly reliable or credible.

Table 6

Reliability Test Results

Variable Cronbach’s Alpha Composite Reliability

Sharia Value 0.824 0.894
Investment Literacy 0.865 0.908
Risk Tolerance 0.843 0.894
Overconfidence 0.773 0.848
Herding Behavior 0.892 0.922
1220 Abadi & Wicaksono

Self-Efficacy 0.784 0.866

Investment Decision 0.862 0.906
Investor Satisfaction 0.931 0.951
Source: Primary data. Authors’ estimation.

Multicollinearity Tests
The multicollinearity test aims to detect potential multicollinearity issues among the
independent variables by examining the Variance Inflation Factor (VIF). According to
standard criteria, a regression model is considered free of multicollinearity if the VIF
value for each independent variable is less than 3. As presented in Table 4.21, all
variables in the research exhibit VIF values between 1.099 and 1.493, comfortably within
the recommended threshold, thus indicating an absence of significant multicollinearity
among the predictor variables. These findings demonstrate that the research model
used in this study is statistically robust, allowing for a clearer interpretation of the effects
of independent variables on dependent variables.

Table 7

Multicollinearity Test Results (VIF)

Variable VIF
Investment Decision (Y1) 1.409
Sharia Value (X1) 1.363
Investment Literacy (X2) 1.493
Risk Tolerance (X3) 1.444
Overconfidence (X4) 1.349
Herding Behavior (X5) 1.422
Self-Efficacy (X6) 1.099
Source: Primary data. Authors’ estimation.

Structural Model (Inner Model) Evaluation

Path Coefficients
The path coefficient test results shown in Table 8 reveal the strength and direction of
relationships among the studied variables. Sharia Value positively influenced Investor
Satisfaction with a coefficient of 0.298, indicating that an increase in adherence to
Sharia principles leads to higher investor satisfaction. Conversely, Investment Literacy
exhibited a negative relationship with Investor Satisfaction, represented by a coefficient
of -0.113, suggesting that greater investment literacy might slightly reduce investor
satisfaction, potentially due to heightened awareness of investment risks or
expectations.

Table 8

Path Coefficient Test Results

Relationship Path Coefficient

Sharia Value → Investor Satisfaction 0.298
Investment Literacy → Investor Satisfaction -0.113
Risk Tolerance → Investment Decision -0.037
 Satisfaction of Sharia stock investors 1221

Relationship Path Coefficient

Overconfidence → Investment Decision 0.196
Herding Behavior → Investment Decision 0.092
Self-Efficacy → Investment Decision 0.624
Investment Decision → Investor Satisfaction 0.618
Source: Primary data. Authors’ estimation.

Additionally, Risk Tolerance showed a negative but weak impact (-0.037) on

Investment Decisions, implying that increased tolerance toward risk slightly reduces
investment decisions among investors. In contrast, Overconfidence positively
influenced Investment Decision with a coefficient of 0.196, indicating that investors who
are more confident tend to make more frequent investment decisions. Similarly,
Herding Behavior also positively influenced investment decisions (0.092), suggesting a
moderate tendency among investors to follow peers in their financial decisions.
Self-Efficacy stood out significantly with a strong positive impact (0.624) on
Investment Decisions, highlighting that investors with higher self-efficacy levels are
more likely to confidently make investment decisions. This finding aligns with
psychological theories emphasizing self-confidence as a crucial determinant of
proactive decision-making behaviors in financial markets.
Lastly, the relationship between Investment Decision and Investor Satisfaction
revealed a strong positive coefficient (0.618), indicating that well-informed and
confident investment decisions substantially boost investor satisfaction. This
underscores the importance of informed and autonomous decision-making processes
in fostering investor contentment and long-term engagement in investment activities.
Cross-Validation Redundancy Test
The cross-validation redundancy (Q²) test results, as presented in Table 9, reveal
predictive relevance within the inner model. Both Investor Satisfaction (Q² = 0.404) and
Investment Decision (Q² = 0.489) demonstrated positive Q² values, indicating moderate
predictive accuracy. These results suggest that the exogenous variables provide
substantial information required to predict variations in the endogenous variables,
confirming the overall suitability and predictive capability of the research model for
explaining investment decisions and investor satisfaction.

Table 9

Results of Q² Predict Test

Variable Q² Predict RMSE MAE

Investor Satisfaction 0.404 0.792 0.612
Investment Decision 0.489 0.745 0.533
Source: Primary data. Authors’ estimation.

Coefficient of Determination (R²)

The coefficient of determination (R²) test results, as presented in Table 10, indicate that
the endogenous variables, Investor Satisfaction and Investment Decision, have
moderate predictive power within the structural model. Specifically, Investor
Satisfaction has an R² value of 0.536, signifying that approximately 53.6% of its variance
1222 Abadi & Wicaksono

is explained by Investment Decision, Sharia Value, and Investment Literacy. Similarly, the
Investment Decision variable shows an R² of 0.521, meaning 52.1% of its variance is
explained collectively by Risk Tolerance, Overconfidence, Herding Behavior, and Self-
Efficacy. These results classify the model's predictive ability as moderate, reflecting
substantial explanatory capability by the exogenous variables included in the analysis.

Table 10

Coefficient of Determination (R²) Test

Variable R Square Adjusted R Square

Investor Satisfaction 0.536 0.527
Investment Decision 0.521 0.508
Source: Primary data. Authors’ estimation.

Hypothesis Testing
The hypothesis test results, as summarized in Table 11, reveal critical insights into the
relationships among studied variables. Firstly, Sharia Value significantly impacts
Investor Satisfaction, indicated by a path coefficient of 0.298 and a p-value of 0.010. This
confirms that stronger adherence to Sharia principles significantly enhances investor
satisfaction, validating the theoretical expectations in the Islamic investment context.

Table 11

Hypothesis Test Results

Relationship Original Std. T P Conclusion

Sample Deviation Statistics Values
Sharia Value → Investor 0.298 0.115 2.587 0.010 Supported
Satisfaction
Investment Literacy → -0.113 0.102 1.108 0.268 Not
Investor Satisfaction Supported
Risk Tolerance → Investment -0.037 0.082 0.458 0.647 Not
Decision Supported
Overconfidence → 0.196 0.086 2.279 0.023 Supported
Investment Decision
Herding Behavior → 0.092 0.069 1.326 0.185 Not
Investment Decision Supported
Self-Efficacy → Investment 0.624 0.071 8.792 0.000 Supported
Decision
Investment Decision → 0.618 0.092 6.713 0.000 Supported
Investor Satisfaction
Source: Primary data. Authors’ estimation.

Secondly, the role of Investment Literacy on Investor Satisfaction shows a non-

significant negative influence with a path coefficient of -0.113 and a p-value of 0.268.
The findings indicate that higher investment literacy alone does not necessarily lead to
increased satisfaction among investors, suggesting the need for a balanced approach
combining literacy with practical investment experience.
 Satisfaction of Sharia stock investors 1223

Regarding Risk Tolerance, the relationship with Investment Decision was not
supported, exhibiting a negative coefficient of -0.037 and a p-value of 0.647. This
indicates that investors' risk tolerance does not significantly influence their investment
decisions, possibly reflecting cautious investor behavior or risk aversion within the
studied sample.
The Overconfidence variable, however, positively and significantly influences
Investment Decision with a coefficient of 0.196 and a p-value of 0.023. Investors who
exhibit higher overconfidence tend to make more proactive and assertive investment
decisions, underscoring the behavioral finance theory that confidence drives market
participation.
Contrastingly, Herding Behavior displayed a non-significant positive effect (0.092
coefficient and 0.185 p-value) on Investment Decision. While theoretically relevant, this
study’s findings suggest that investors in this context are not significantly influenced by
group behavior or peer pressure when making investment choices.
The variable Self-Efficacy showed a highly significant positive effect on Investment
Decision, indicated by a robust path coefficient of 0.624 and a highly significant p-value
of 0.000. This strong influence suggests that self-efficacy, or investors' belief in their
abilities, is crucial in shaping proactive and confident investment decisions.
Finally, the Investment Decision itself significantly and positively impacts Investor
Satisfaction, with a path coefficient of 0.618 and a p-value of 0.000. This reinforces the
critical role that informed and confident decision-making plays in achieving higher
levels of satisfaction among investors, providing a clear pathway to enhancing investor
experiences and outcomes.

DISCUSSION

Sharia Values as a Foundation for Satisfaction

The findings of this study indicate that Sharia values significantly impact the
satisfaction of Sharia stock investors. Based on an analysis of 151 respondents from two
provinces, primarily consisting of novice investors with less than six months of market
experience, the study found a statistically significant relationship between Sharia
values and investor satisfaction (p-value = 0.010, < 0.05). This suggests that adherence
to Sharia principles in stock investments contributes to investor confidence and
contentment. Investors derive satisfaction from the belief that their chosen stocks align
with Islamic principles, ensuring ethical and risk-averse financial decisions. The
absence of elements such as maysir (speculation), gharar (uncertainty), and riba
(usury) in Sharia-compliant stocks fosters a sense of security. Additionally, the
oversight of Sharia supervisory boards ensures that investment practices remain
compliant with Islamic ethics, further reinforcing investor trust (Afroh & Hafidzi, 2024;
Hussain et al., 2023; Sudirman et al., 2023). Prior research aligns with these findings,
emphasizing that Muslim investors prioritize ethical and religious considerations
alongside financial returns, which enhances their overall investment satisfaction
(Hambali & Adhariani, 2023; Taufik & Rusmana, 2023).
1224 Abadi & Wicaksono

While limited research contradicts these findings, some studies suggest that
external factors, such as financial literacy and macroeconomic conditions, can
moderate the impact of Sharia values on investor satisfaction. For instance, investors
with low financial literacy may struggle to fully comprehend Sharia investment criteria,
potentially affecting their confidence in Sharia stocks (Septyanto et al., 2021).
Additionally, during economic downturns, some investors may prioritize financial
stability over ethical considerations, leading to variations in satisfaction levels
(Tripuspitorini et al., 2023). However, studies also indicate that Sharia-compliant
investments provide a stabilizing effect during crises, reinforcing investor trust in their
long-term viability (Hambali & Adhariani, 2023; Irton et al., 2021). Overall, the prevailing
body of research supports the notion that ethical and religious adherence in investing
plays a central role in shaping investor satisfaction (Agustin, 2022; Mutiara et al., 2023).
These findings carry significant implications for financial institutions and
policymakers aiming to enhance the Sharia investment sector. Recognizing that
investor satisfaction extends beyond financial performance to ethical and religious
considerations, investment advisors should provide targeted financial education
programs to improve investor literacy on Sharia-compliant stocks. Additionally,
regulatory bodies should continue strengthening the governance frameworks of
Sharia-compliant firms to maintain investor trust. The growing demand for ethical
investment options also presents an opportunity for financial institutions to develop
innovative Sharia-compliant products that align with investor values. By addressing
both the financial and ethical concerns of Muslim investors, institutions can foster
greater investor confidence and long-term participation in the Sharia investment
market.

Behavioral Traits and Investment Decisions

The study highlights the critical role of behavioral traits—particularly overconfidence
and self-efficacy—in shaping investment decisions. Both traits emerged as significant
predictors of proactive and informed decision-making, reflecting their importance in
navigating complex financial markets.
Overconfidence
The findings of this study indicate that overconfidence significantly influences
investment decisions in Sharia stocks. Hypothesis testing results show a p-value of
0.023, which is below the 0.05 threshold, confirming that overconfidence affects investor
decision-making. Respondents in this study exhibited a high level of self-confidence,
leading them to make investment decisions based on their perceived expertise rather
than objective financial analysis. This aligns with previous research, which suggests that
overconfident investors tend to overestimate their ability to predict market movements,
leading them to take excessive risks in their investments (Fridana & Asandimitra, 2020).
Additionally, due to their easy access to financial information, younger and less
experienced investors—such as the majority of respondents in this study—often develop
misplaced confidence in their investment skills, reinforcing the tendency to make
irrational investment choices.
 Satisfaction of Sharia stock investors 1225

Supporting evidence from behavioral finance research indicates that

overconfidence bias is a significant factor in shaping investor satisfaction. Fridana &
Asandimitra (2020) found that investors with excessive self-confidence are more likely
to engage in frequent trading, misjudge market risks, and make suboptimal financial
decisions. This supports the notion that overconfidence leads to increased market
participation, yet it does not necessarily translate into better investment outcomes.
Instead, overconfident investors may experience fluctuations in satisfaction levels, as
their expectations do not always align with actual investment performance (Mahjoubi
& Henchiri, 2024; Mushinada & Veluri, 2020). However, there are instances where
overconfidence can be beneficial—when the market performs favorably, overconfident
investors may achieve significant profits and reinforce their belief in their predictive
abilities, thereby enhancing their satisfaction.
The implications of these findings highlight the need for financial education
programs that help investors recognize and manage overconfidence bias. While
confidence is an essential trait in investing, unchecked overconfidence can lead to
irrational decision-making and unexpected losses. Financial institutions and
investment advisors should implement strategies that encourage self-assessment and
risk-awareness among investors, particularly those new to the market. Additionally,
increased transparency and corporate governance in Sharia-compliant firms can help
investors make more informed decisions, reducing the likelihood of overconfident
investment behavior. By fostering a balanced approach to investing—where
confidence is tempered by realistic expectations and adherence to Sharia principles—
investors can achieve greater satisfaction while minimizing the risks associated with
behavioral biases.
Self-Efficacy
The findings of this study indicate that self-efficacy significantly influences investment
decisions in Sharia stocks. Hypothesis testing results show a p-value of 0.000, which is
below the 0.05 threshold, confirming a strong relationship between self-efficacy and
investor decision-making. This suggests that individuals with higher confidence in their
abilities are more likely to engage in investment activities and make informed decisions
to achieve their financial goals. Investors with high self-efficacy believe they can
navigate investment complexities, assess risks, and select stocks aligned with their
objectives. These results align with prior research, such as Mita & Siagian (2021), which
found that self-efficacy significantly impacts students' investment decisions. Given that
most respondents in this study were university students, their confidence in their
financial knowledge and investment capabilities likely played a critical role in their
decision-making processes.
Supporting evidence from behavioral finance research suggests that self-efficacy
enhances an investor’s ability to analyze market conditions and manage investment
risks effectively. Studies by Nadeem et al. (2020) and Taufik & Rusmana (2023) highlight
that individuals with high self-efficacy are more proactive in financial decision-making
and are better equipped to withstand market fluctuations. Furthermore, Parvin et al.
(2024) emphasize that financial literacy significantly boosts self-efficacy, leading to
1226 Abadi & Wicaksono

more strategic investment decisions, particularly in Sharia-compliant markets where

ethical considerations are paramount. This underscores the importance of confidence
in one's financial abilities, as it empowers investors to participate actively in the stock
market while adhering to their ethical and religious values.
These findings have important implications for financial education and investment
strategies in the Sharia stock market. Financial institutions and policymakers should
focus on improving financial literacy programs to enhance self-efficacy among
investors, particularly young and novice participants. By equipping investors with the
necessary knowledge and analytical skills, they can make more informed and confident
investment decisions. Additionally, investment platforms should provide accessible
tools and resources to help investors assess their risk tolerance and investment
potential. Strengthening self-efficacy through targeted education and support can
lead to higher investor engagement and satisfaction, ultimately fostering a more stable
and ethically responsible Sharia investment market.
Herding Behavior
The findings of this study indicate that herding behavior does not significantly influence
investment decisions in Sharia stocks. Hypothesis testing results show a p-value of
0.185, exceeding the 0.05 threshold, suggesting no statistically significant relationship
between herding behavior and investor decision-making. This implies that respondents
in this study made independent investment choices rather than simply following the
opinions of others or the majority of investors. These findings align with previous
research by Loppies et al. (2022) and Mahadevi & Haryono (2021), which also concluded
that herding behavior does not play a significant role in investment decisions. One
explanation for this is that the majority of respondents in this study were university
students and millennial investors aged 20 to 30, who tend to be more technologically
adept and have easier access to reliable financial information. Their ability to quickly
analyze and verify investment data allows them to make independent decisions rather
than relying on collective investor sentiment.
Further supporting these results, studies suggest that investors with higher financial
literacy and market awareness are less likely to exhibit herding behavior. Research by
Babar et al. (2016) found that when investors have access to abundant and credible
financial information, they are more inclined to make rational investment decisions
based on their own analysis rather than following the crowd. Similarly, Yahya et al.
(2024) emphasize that during periods of market uncertainty, some investors may still
be prone to herding behavior, but those with a solid understanding of market
fundamentals and Sharia principles are better equipped to resist collective influences.
In the context of Sharia investing, this is particularly important, as adherence to ethical
and religious principles often requires careful individual assessment rather than blind
conformity to market trends.
These findings have important implications for financial education and investment
strategies in the Sharia stock market. The results suggest that promoting financial
literacy and access to transparent financial information can help investors make more
informed and independent decisions, ultimately enhancing their satisfaction. Financial
 Satisfaction of Sharia stock investors 1227

institutions and regulatory bodies should focus on developing educational programs

that emphasize critical thinking and independent financial analysis, especially for
young and novice investors. Additionally, strengthening transparency in Sharia-
compliant investment instruments can help ensure that investors base their decisions
on reliable data rather than market speculation. By fostering a culture of informed
decision-making, financial institutions can mitigate the effects of herding behavior and
enhance overall investor satisfaction in the Sharia investment market.
Risk Tolerance
The findings of this study indicate that risk tolerance does not significantly impact
investment decisions in Sharia stocks. Hypothesis testing results show a p-value of
0.647, exceeding the 0.05 threshold, which suggests no statistically significant
relationship between an investor’s risk tolerance and their investment choices in
Sharia-compliant stocks. This implies that even if an investor has a high tolerance for
risk, it does not necessarily influence their decision to invest in Sharia-compliant stocks.
One possible explanation is that investors in this study, who were predominantly
students with less than six months of investment experience, tend to exhibit a
conservative approach, prioritizing security over risk-taking. Previous research supports
this notion, emphasizing that novice investors, particularly those with limited market
exposure, often avoid riskier investment behaviors, which in turn may limit the role of
risk tolerance in shaping their satisfaction levels (Mahastanti et al., 2021; Yulianto &
Wijaya, 2023).
Contrary to these findings, prior research suggests that risk tolerance plays a
crucial role in shaping investor satisfaction. Tamara et al. (2022) found that investors
with higher risk tolerance exhibit greater confidence in their investment decisions, which
enhances their overall satisfaction. This discrepancy may stem from differences in the
respondent pool, as Tamara et al.’s study focused on more experienced investors who
actively manage their portfolios and adjust their strategies based on market
fluctuations. Additionally, research by Irton et al. (2021) highlights that Muslim investors
often balance their risk tolerance with ethical and religious considerations, ensuring
that their investment choices align with Islamic principles while seeking profitability. This
reinforces the idea that investors who can accurately assess their risk tolerance tend to
make more informed decisions, which ultimately contributes to higher levels of
satisfaction (Lestari et al., 2021; Nurhidayah, 2022).
These findings have important implications for financial institutions and investment
advisors catering to Sharia-compliant investors. While risk tolerance may not always
directly influence investment decisions, financial literacy programs should incorporate
risk management education to help investors align their expectations with their
investment strategies. Additionally, given the demographic differences in risk tolerance,
tailored investment products should be developed to accommodate varying investor
profiles. For conservative investors, structured Sharia-compliant investment options
with lower volatility may enhance satisfaction, while those with higher risk tolerance
may benefit from diversified Sharia-compliant portfolios. By improving investor
education and offering products that align with different risk preferences, financial
1228 Abadi & Wicaksono

institutions can enhance investor confidence and satisfaction in the Sharia investment
market (Taufik & Rusmana, 2023).

Financial Literacy: An Indirect Influence

The findings of this study indicate that financial literacy does not significantly impact
the satisfaction of Sharia stock investors. Based on hypothesis testing, the p-value for
financial literacy was 0.268, which exceeds the 0.05 threshold, suggesting no
statistically significant relationship between financial literacy and investor satisfaction.
Interestingly, this study found that higher levels of financial literacy among investors
correlated with lower satisfaction in their investment activities. One possible
explanation is that as investors gain more knowledge, they become more critical of their
investment outcomes, leading to heightened expectations that are not always met. This
aligns with research suggesting that while financial literacy enhances investment
decision-making, it can also lead to greater scrutiny and dissatisfaction when results
fall short of expectations (Fauzi & Rafik, 2024; Septyanto et al., 2021).
Contrary to these findings, prior research suggests that financial literacy positively
influences investor satisfaction. Parmitasari et al. (2020) argue that investors with a
higher understanding of financial concepts experience greater confidence in their
decisions, leading to improved satisfaction. However, differences in respondent
demographics may explain the conflicting results. The present study primarily surveyed
university students with less than six months of investment experience, meaning their
knowledge of stock investments might still be developing. As a result, their ability to
evaluate investment satisfaction objectively may be limited. In contrast, studies
involving more experienced investors have shown a positive correlation between
financial literacy and satisfaction, as knowledgeable investors are better equipped to
navigate risks, understand market trends, and set realistic expectations (Iqbal et al.,
2023; Widyastuti et al., 2022).
These findings have important implications for financial education and investment
strategies. While financial literacy is essential for making informed decisions, financial
institutions and policymakers should recognize that increased literacy can sometimes
lead to heightened expectations, which may affect satisfaction levels. To mitigate this,
investment advisors should provide educational programs that not only enhance
financial knowledge but also help investors set realistic goals and manage
expectations. Additionally, targeted financial literacy initiatives should consider investor
demographics, ensuring that education is tailored to different experience levels. By
fostering a balanced understanding of both risks and rewards, financial literacy
programs can contribute to a more positive investment experience, ultimately
improving investor confidence and long-term participation in the Sharia investment
market.
 Satisfaction of Sharia stock investors 1229

Investment Decisions as a Mediator

The Influence of Investment Decisions on Investor Satisfaction in Sharia Stocks
The findings of this study indicate that investment decisions significantly influence
investor satisfaction in Sharia stocks. Hypothesis testing results show a p-value of 0.000,
which is below the 0.05 threshold, confirming a strong relationship between investment
decisions and investor satisfaction. This suggests that well-informed and strategic
investment choices contribute to a greater sense of fulfillment among investors in
Sharia-compliant stocks. When investors feel confident in their decisions—whether
based on financial analysis, ethical considerations, or risk assessment—they are more
likely to experience satisfaction. These findings align with research by Febriansyah et al.
(2023), which highlights that investment decisions play a crucial role in shaping investor
satisfaction, reinforcing the idea that the quality of investment choices directly impacts
an investor’s overall experience in the market.
Further supporting this relationship, studies suggest that investment decisions are
influenced by factors such as financial literacy, risk tolerance, and religious adherence,
all of which contribute to investor satisfaction. Research by Irton et al. (2021) shows that
well-educated investors who understand the principles of Sharia investing tend to
make better investment decisions, leading to a higher degree of satisfaction. Similarly,
Septyanto et al. (2021) found that investors who actively manage their portfolios and
align their choices with personal financial goals and ethical standards report greater
contentment with their investments. This indicates that satisfaction is not merely a
result of financial returns but also stems from the alignment of investment decisions
with personal beliefs and values, particularly in the context of Islamic finance.
These findings have important implications for financial education and investment
strategies in the Sharia stock market. Financial institutions and regulatory bodies should
focus on enhancing investor awareness and education regarding Sharia-compliant
investment options. Providing investors with tools for risk assessment, ethical screening,
and portfolio diversification can help them make more informed decisions, ultimately
increasing their satisfaction. Additionally, investment platforms should integrate
transparent and easily accessible information about Sharia compliance to assist
investors in making ethical and profitable investment choices. By promoting financial
literacy and strategic decision-making, the Sharia investment market can foster a more
engaged and satisfied investor base, ensuring long-term growth and stability.

Integration of Behavioral Finance and Sharia Principles

The study contributes to the growing literature on behavioral finance in sharia markets
by integrating psychological and ethical dimensions. The interplay between
overconfidence, self-efficacy, and sharia values underscores the unique dynamics of
satisfaction in this context. Unlike conventional markets, where financial returns
dominate, sharia markets emphasize a balanced approach that incorporates ethical,
emotional, and financial factors.
This integration offers valuable insights for researchers and practitioners. By
understanding the behavioral and ethical drivers of satisfaction, stakeholders can
1230 Abadi & Wicaksono

design products and interventions that resonate with the values and motivations of
sharia investors. For example, financial institutions can develop tailored products that
align with ethical principles while addressing psychological needs, such as confidence
and autonomy.

Practical Implications
The findings have significant implications for policymakers, financial institutions, and
educators.

1. For Policymakers
Policymakers should prioritize the development of regulations that reinforce
ethical standards and transparency in sharia markets. By ensuring strict
compliance with sharia principles, they can foster trust and attract more
investors to the sector.
2. For Financial Institutions
Institutions should emphasize ethical alignment in product design and
marketing. Providing resources that enhance confidence and decision-making
skills can further improve investor satisfaction.
3. For Educators
Financial literacy programs should integrate sharia principles to ensure that
knowledge translates into meaningful outcomes. By addressing both technical
and ethical dimensions, these programs can empower investors to navigate
markets effectively.

CONCLUSION

This study examines the factors influencing investor satisfaction in the Indonesian
sharia stock market, with a focus on the interplay between sharia values, behavioral
traits, financial literacy, and investment decisions. The findings reveal that sharia values
are the most significant determinant of satisfaction, underscoring the centrality of
ethical alignment in fostering trust and contentment. Behavioral traits, particularly
overconfidence and self-efficacy, positively influence investment decisions, which in
turn mediate satisfaction levels. However, financial literacy, herding behavior, and risk
tolerance exhibit limited or indirect effects on satisfaction, highlighting the complex
dynamics of sharia-compliant investing.
The study contributes to the literature by integrating behavioral finance and sharia
principles, offering a nuanced understanding of satisfaction in ethical investing
contexts. It emphasizes the importance of psychological and ethical dimensions
alongside financial considerations, providing valuable insights for practitioners,
policymakers, and educators. By addressing these factors holistically, stakeholders can
design more effective interventions to enhance investor experiences. Future research
should explore longitudinal impacts and regional variations to build on these findings
and expand their applicability.

Limitations of the Study

 Satisfaction of Sharia stock investors 1231

Despite its contributions, this study has limitations that should be acknowledged. The
reliance on self-reported data introduces potential biases, such as overestimation of
confidence or satisfaction. While the use of validated scales mitigates this issue to
some extent, future studies could adopt mixed-method approaches to provide a more
comprehensive understanding of investor behavior. Combining survey data with
qualitative interviews or observational studies could uncover deeper insights into the
motivations and challenges faced by investors.
The cross-sectional design of this research limits its ability to capture long-term
dynamics and behavioral changes over time. Longitudinal studies would provide a
richer understanding of how satisfaction evolves, particularly as markets and individual
circumstances fluctuate. Additionally, the sample focuses primarily on investors in
specific provinces, which may limit the generalizability of the findings. Expanding the
scope to include diverse geographic regions and demographic groups could yield
broader insights.
Finally, the study primarily addresses individual investors without exploring the
potential influence of external factors, such as market conditions or regulatory
frameworks. Future research should consider these contextual variables to provide a
more holistic perspective on sharia-compliant investing.

Recommendations for Future Research

Building on the insights of this study, several areas warrant further exploration. First,
longitudinal research is essential to examine the evolution of satisfaction and
behavioral traits over time. Such studies could reveal the long-term impacts of sharia
principles and behavioral interventions on investor outcomes, offering a deeper
understanding of their sustainability.
Second, cross-regional comparisons would provide valuable insights into the
cultural and contextual factors shaping sharia-compliant investing. Investigating how
regional interpretations of sharia principles influence satisfaction and decision-making
could enhance the applicability of findings across diverse markets.
Third, future research should explore the role of external factors, such as regulatory
policies, market volatility, and institutional trust, in shaping investor satisfaction.
Understanding these influences could inform strategies to strengthen the ecosystem
for sharia-compliant investments.
Lastly, integrating advanced analytical methods, such as experimental designs or
machine learning, could provide more precise insights into the interactions among
variables. These approaches would enable researchers to identify nuanced patterns
and causal relationships, advancing the theoretical and practical understanding of
satisfaction in ethical investing contexts.

Author Contributions
Conceptualization F.A. & M.A.D. Resources F.A. & M.A.D.
Data curation F.A. & M.A.D. Software F.A. & M.A.D.
Formal analysis F.A. & M.A.D. Supervision F.A. & M.A.D.
Funding acquisition F.A. & M.A.D. Validation F.A. & M.A.D.
1232 Abadi & Wicaksono

Investigation F.A. & M.A.D. Visualization F.A. & M.A.D.

Methodology F.A. & M.A.D. Writing – original draft F.A. & M.A.D.
Project administration F.A. & M.A.D. Writing – review & F.A. & M.A.D.
editing
All authors have read and agreed to the published version of the manuscript.

Funding
This study received no direct funding from any institution.

Institutional Review Board Statement

The study was approved by Program Studi Ekonomi Islam (S1), Universitas Islam Indonesia, Yogyakarta,
Indonesia.

Informed Consent Statement

Informed consent was obtained before the respondents filled out the questionnaire.

Data Availability Statement

The data presented in this study are available from the corresponding author upon reasonable
request.

Acknowledgments
The authors thank Program Studi Ekonomi Islam (S1), Universitas Islam Indonesia, Yogyakarta,
Indonesia, for administrative support for the research on which this article was based.

Conflicts of Interest
The authors declare no conflicts of interest.

Declaration of Generative AI and AI-Assisted Technologies in the Writing Process

During the preparation of this work, the authors used ChatGPT, DeepL, Grammarly, and PaperPal in
order to translate from Bahasa Indonesia into American English, and to improve clarity of the language
and readability of the article. After using these tools, the authors reviewed and edited the content as
needed and take full responsibility for the content of the published article.

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