An Analysis of Financial Literacy Level on Participants in the
Polibatam Capital Market School Cooperation between Indonesia
Stock Exchange and PT Phillip Sekuritas Indonesia Batam Branch
Sonny Gunawan, and Muhammad Ramadhan Slamet
Department of Business Management, Politeknik Negeri Batam, Jl.Ahmad Yani, Batam, Indonesia
Keywords: Financial literacy, Capital Market Schools, Capital Markets.
Abstract: The purpose of this study is to determine the level of financial literacy of participants in the Polibatam capital
market school. This study's financial literacy aspects include aspects of personal basic financial knowledge,
loans and credit, savings and deposits, insurance, and investment. This research is a descriptive study of the
quantitative method. This study’s sample consists of 30 participants of Polibatam capital market school
between January to March 2020. This study's results indicated that the financial literacy level of Polibatam
capital market school participants between January to March 2020 as a whole is 84.8%. According to Chen
and Volpe, if the percentage is interpreted into the financial literacy level criteria, then 84.8% is in the high
category (> 80%).
1 INTRODUCTION
Every individual or student needs financial literacy,
which is a basic need. Financial problems can not
only be caused by income, but also from mistakes in
financial management, such as economic difficulties.
Therefore, every individual and student must have
financial literacy to minimize financial problems.
Financial literacy is a set of processes to increase
the confidence, knowledge, and skills of the wider
community to manage finances well. Indonesian
people have not used financial institutions properly,
even though financial literacy is a fundamental need
in managing finances. The low level of financial
literacy in Indonesian society has an impact on the use
of financial services. (Otoritas Jasa Keuangan, 2014).
In connection with that, Indonesia Stock
Exchange cooperates with several universities to
improve financial literacy in Indonesia. One of them
is Politeknik Negeri Batam. The college has
established a collaboration between Indonesia Stock
Exchange and PT Philip Sekuritas Batam Branch to
hold an investment gallery. One of the agenda, the
implementation of the Capital Market School or
commonly abbreviated as SPM.
Measurement of the level of financial literacy is
an essential thing for SPM participants. It aims to
determine the financial literacy profile of each
participant so that the SPM organizers can find out
potential investors in utilizing financial products and
services. Also, this measurement is useful for SPM
organizers to evaluate the material presented to adjust
the average level of participants' financial literacy.
2 LITERATURE REVIEW
2.1 Financial Literacy
Financial literacy is an essential requirement that is
needed for someone to avoid financial problems.
Financial problems can not only be caused by income,
but also from mistakes in financial management and
lack of knowledge in managing finances. Achieving
and improving the welfare of financial literacy
signifies individuals' ability to use the resources they
have (Dwiastanti & Hidayat, 2016). The level of
financial literacy by OJK is divided into four, namely:
1. Well literate is a skill in using service and
financial products and having knowledge and
confidence in financial institutions, including
features, benefits and risks, rights, and obligations
related to financial service products.
2. Sufficient literate is the ability to have confidence
and knowledge of financial institutions.
Gunawan, S. and Slamet, M.
An Analysis of Financial Literacy Level on Participants in the Polibatam Capital Market School Cooperation Between Indonesia Stock Exchange and PT Phillip Sekuritas Indonesia Batam
Branch.
DOI: 10.5220/0010353402050211
In Proceedings of the 2nd International Conference on Applied Economics and Social Science (ICAESS 2020) - Shaping a Better Future Through Sustainable Technology, pages 205-211
ISBN: 978-989-758-517-3
Copyright
c
2021 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
205
3. Less literate is an ability that only knows financial
institutions and products.
4. Not literate is having no skills in using financial
products and services and knowledge, and
confidence in financial institutions.
Financial literacy, in general, can be divided into
two, namely basic financial literacy and advanced
financial literacy (Lusardi, 2011).
1. Basic financial literacy
Basic financial literacy is centred on a
fundamental question: does someone have the
necessary level of financial knowledge needed to
make financial decisions.
2. Advanced financial literacy
More knowledge is needed compared to
fundamental knowledge in making savings and
investment decisions. This statement states that
someone who knows advanced finance will
understand risk and income: how bonds, stocks,
and mutual funds work, and basic asset pricing.
2.2 Aspects of Financial Literacy
According to Nababan & Sadalia (2012) explanation
in financial literacy, there are several aspects, which
include:
1. Basic Personal Finance, namely about the basic
knowledge possessed by individuals in
understanding the financial system such as
inflation, interest rates, asset liquidity, credit, and
so forth.
2. Cash Management (money management), i.e.,
one's ability to manage finances appropriately and
adequately. If an individual manages his finances
well, he has the right level of financial literacy.
3. Credit and Debt Management, namely the process
of activities that are interconnected between one
another in a structured manner in the process of
collecting and presenting information about a
bank's credit. In contrast, debt management is a
debt payment system that involves third parties in
assisting debt lending.
4. Saving (Savings), which is the portion of a
person's income that is not used for consumption,
but instead is allocated to be savings. Study
someone how they can set aside a portion of their
income source for savings and manage it.
2.3 Capital Market School
According to the Indonesia Stock Exchange (2017),
the Capital Market School (SPM) is an educational
program that is regularly held by the Indonesia Stock
Exchange (IDX). The purpose of this educational
program is to help all levels of society better
understand the procedures for becoming an investor
in the capital market. SPM is divided into two levels:
1. SPM level 1 which is intended for people who
have never been a stock investor. Participants
will get material on investments, especially
stock investments and how to invest shares in
the Indonesian capital market and a general
description of the capital market.
2. SPM level 2, namely an Investment Workshop
intended for people who have become stock
investors in the Indonesian capital market.
Participants must bring proof of SID by carrying
an access card or trading transaction
confirmation of shares when they take SPM
level 2. SPM level 2 can also be followed by
SPM level 1 participant on the same day. The
participants will learn about fundamental
analysis and technical analysis as a basis for
choosing stocks to be invested.
2.4 Capital Market
Article 1 number 13 of Law No.8 of 1995 states,
"Capital Market is a market that has activities to
conduct public offerings and trade in securities
involving public companies and institutions and
professions related to securities." Meanwhile, the
Stock Exchange is an institution that provides
facilities and systems and organizes to bring together
securities sellers and buyers of other parties with the
intention of trading securities among market
participants.
2.5 Capital Market Function
According to Tandelilin (2001), a capital market is a
meeting place for sellers and buyers of securities that
risk profit and loss. In essence, the capital market has
two market functions, namely:
1. Intermediary institutions have an essential role in
supporting the economy; therefore, the capital
market can involve parties who have excess funds
with those who need funds.
2. Encouraging the creation of efficient fund
allocations; this is due to the existence of a capital
market. The party with excess funds (investor)
can choose investment alternatives that provide
optimal returns.
According to Sunariyah (2006), the function of
the capital market in a country is as follows:
1. As a place to interact between sellers and buyers
to determine the price of shares or securities
traded.
ICAESS 2020 - The International Conference on Applied Economics and Social Science
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2. Provide opportunities for investors to determine
the expected return.
3. Provide an opportunity for investors to resell their
shares or other securities.
4. Provide opportunities for all people to be able to
participate in the development of a country's
economy.
5. Reducing information and transaction costs for
securities.
2.6 Capital Market School Instruments
Tandelilin (2001) explains that capital market
instruments are all securities that are traded generally
in the capital market. According to Law No. 8 of 1995
concerning the capital market, securities represent all
commercial debt securities, receipts of debt, bonds,
shares, credit securities, every right, option, warrants,
or derivatives of securities or all instruments
designated as securities.
In general, securities traded through the capital
market include bonds, shares, mutual funds, and
derivative instruments. The following is an
explanation of the following instruments as follows:
1. Shares are proof of ownership of a person on the
assets of a company. One of the most popular
types of instruments in the capital market is stocks.
Investors who own shares will receive dividends
and take advantage of fluctuations/increases in
share prices by reselling the shares to obtain
profits that are commonly called capital gains.
2. A bond is a certificate that contains a contractual
agreement between the company and the investor.
It states that the investor has lent some money to
the company (the issuer) as the bondholder. Each
company that issues bonds should pay interest
regularly by a predetermined period and the
principal at maturity.
3. A mutual fund is a certificate stating that someone
entrusts a certain amount of money to a securities
company to be managed by a professional
investment manager, to be used as capital to invest
in the capital market or the money market.
4. Derivative instruments are derivatives of other
securities. These instruments cause the value of
derivative instruments is highly dependent on the
price of other securities. In general, types of
derivative instruments include proof of rights
(right issue), options, warrants, and futures.
3 RESEARCH METHOD
3.1 Research Object
This research object is Polibatam Capital Market
School Cooperation Between Indonesia Stock
Exchange and PT Phillip Sekuritas Indonesia Batam
Branch.
3.2 Sample Research
This research uses a sample convenience method.
Here are the sample criteria of this research, ie.
1. Participants of Polibatam Capital Market School
(SPM) cooperation between Indonesia Stock
Exchange and PT Phillip Sekuritas Indonesia
Batam Branch.
2. Participated in the Capital Market School (SPM)
period from January to March 2020.
According to Roscoe Sugiyono in Mamik (2015),
determining the minimum number of samples in this
study follows the provisions of 30 respondents.
3.3 Data Collection Method
In this study, the method of data collection is a
questionnaire. This questionnaire is a collection of
questions about investments, general financial
knowledge, loans, insurance, savings, and
investment. The questions adopted from the question
are in the research of Chen and Volpe in the year
1998. One correct question will get a score of 1 if the
wrong answer will get a score of 0. Here is the
formula (1).
=
x 100% (1)
The calculation result will be compared with the
criteria of financial literacy, according to Chen and
Volpe.
Table 1: Financial literacy level.
FinancialLiteracyLevel TheCorrectNumberof
Questions
Low <60%
Middle 60‐80%
High >80%
An Analysis of Financial Literacy Level on Participants in the Polibatam Capital Market School Cooperation Between Indonesia Stock
Exchange and PT Phillip Sekuritas Indonesia Batam Branch
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3.4 Data Analysis Method
The data analysis method used is descriptive. This
method outlines and describes the data that has been
collected without making a general conclusion
(Sugiyono, 2014). In this study, it will be described
and spelled out related to the condition of financial
literacy of the capital market school participants in
Politeknik Negeri Batam.
4 RESULTS AND DISCUSSION
4.1 Results of Collected Data
Processing
This study aims to determine the condition of the
description of the participants' financial literacy level
in the Polibatam capital market school between
January to March 2020. By filling out the
questionnaire that has been distributed, it will
describe the financial literacy level of the Polibatam
capital market school participants with the
convenience sampling technique. The questionnaires
distributed by researchers to participants in the
Polibatam capital market school in 2020 were 102
participants who attended the capital market school in
the January-March period. However, 35
questionnaires were received back. Only 30
questionnaires met the criteria for further data
processing, while five questionnaires were deemed
inappropriate because they did not meet the criteria
set. The results of processing the collected data can
be seen in Table 2 below:
Table 2: Questionnaire data collected.
Total
Numberofquestionnairesdistributed 102
Numberofquestionnairesreceivedback 35
Numberofquestionnairesthatcannotbe
processed
5
Numberofquestionnairesthatcanbe
processed
30
Questionnaire distribution data based on
participants who attended the capital market school in
January-March 2020 can be seen in table 3 below:
Table 3: Questionnaire Distribution Data for January –
March.
Month
Number of
Respondent
Percentage
January 2 7%
February 2 23%
March 21 70%
Total 30 100%
Based on table 3 above, the number of
respondents who have filled out the questionnaire in
January is 7% and the number of respondents in
February is 23%, and the number of respondents in
March is 70%. It can be said that most of the
respondents who filled out the most questionnaires
were capital market school participants in March
2020.
4.2 Characteristics of Respondents
Based on table 4 below, from the 30 respondents, the
number of respondents who are male was 6.7%, and
the number of female respondents was 93.3%,
meaning that most respondents are female. This is
because based on the data of respondents who register
for capital market schools, it tends to be mostly
women than men. It is because of the results of
research conducted by Krishna et al. (2010) in their
research found that women tend to understand
financial literacy better than men. The number of
respondents who have 0-20 years of age is 40%, and
the number of respondents who have 20-40 years of
age is 60%. The number of respondents who have an
income level of <10 million is 86.7%. The number of
respondents who have an income level between 10-
50 million is 10%, and 3.3% of respondents have an
income level between 50-100 million.
Table 4: Characteristics of respondents.
Characteristics Numberof
respondents
%
Gender:
1.Male 2 6.7%
2.Female 28 93.3%
Age:
1.0‐20 12 40%
2.20‐40 18 60%
IncomeLevel(Rp)
1.<100million 26 86.7%
2.10‐50million 3 10%
3.50–100million 1 3.3%
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4.3 Overall Financial Literacy Level
The results of the study of the level of financial
literacy in the participants of the Polibatam capital
market school between January to March 2020 can be
seen in Table 5.
The way to obtain the results of calculating the
level of financial literacy is that all correct answer are
calculated divided by the number of questions then
multiplied by 100%. The lowest score is the
respondent who can only answer 17 questions
correctly from 25 questions given (68%). The highest
score is the respondent who can answer 24 questions
correctly from the 25 questions given (96%). The
average of respondents can answer the question
correctly at 84.8%, which shows that the level of
financial literacy of Polibatam capital market school
participants between January to March 2020 is high
(> 80%).
Table 5: Percentage of overall financial literacy level.
Descriptive
statistics
Percentageof
financialliteracy
level
Financial
literacylevel
Minimum 68% Middle
Maximum 96% High
Average 84.8% High
4.4 Financial Literacy Level
Table 6 below shows that 73.33% of respondents
have a high level of financial literacy that can answer
questions correctly above 80%. Only 26.67% of
respondents have a middle level that can answer
questions correctly between 60% -80%, and none of
the respondents answered the question correctly
below 60% (low).
Table 6: Financial literacy level.
Financial
LiteracyLevel
Numberof
Respondents
Percentage
Low 0 0%
Middle 8 26.7%
High 22 73.3%
Total 30 100%
4.5 Percentage of Respondents
Answered Each Question Correctly
Table 7: Percentage of Respondents Answered Each
Question Correctly
Table 7 below shows the percentage of the
number of respondents who can answer each part of
the question correctly and the average percentage of
correct answers for each aspect of the question. In the
aspect of general knowledge of personal finance, it
can be seen in question item number 1,2,3 that the
correct answer of the respondent is 100%, while the
item questions number 4 and 5 are 56.67% and
43.33%. It can be seen that the average percentage of
correct answers in the aspect of general knowledge of
personal finance is 80% (intermediate category). It is
An Analysis of Financial Literacy Level on Participants in the Polibatam Capital Market School Cooperation Between Indonesia Stock
Exchange and PT Phillip Sekuritas Indonesia Batam Branch
209
known that the general knowledge aspect of personal
finance in question items number 4 and 5 falls into the
low literacy level category because the understanding
and knowledge of personal finance regarding
financial concepts is still too low.
In the aspect of savings and savings, it can be seen
in question item number 1 that the respondent's
correct answer is 73.33%, item questions number 2
and 3 are 100% and 80%, while question items
number 4 and 5 are 93.33%. It can be seen that the
average percentage of correct answers in terms of
correct savings and savings is 88% (high category).
In the aspect of loans and credit, it can be seen in
question item number 1 that the respondent's answer
is correct, namely 96.67%, item questions number 2
and 3 are 53.33% and 56.67%, while question items
number 4 and 5 are 96.67% and 86.67%. It can be
seen that the average percentage of correct answers in
the aspect of loans and credit correctly is 78% (middle
category). It is known that the loan and credit aspects
in question items 2 and 3 fall into the low literacy
level category, this is due to a lack of understanding
of loan concepts related to the use of credit,
determination of credit interest, and credit rating. This
is because few of the capital market school
participants use credit cards to support their daily
needs. They think that they don't really need credit
services.
In the insurance aspect, it can be seen in question
item number 1 that the respondent's correct answer is
93.33%, question items number 2 and 3 are 96.67%
and 100%, while question items number 4 and 5 are
86.67% and 90%. It can be seen that the average
percentage of correct answers in the aspect of
insurance correctly is 93.33% (high category).
In the investment aspect, it can be seen in question
item number 1 that the respondent's correct answer is
90%, question items number 2 and 4 are 100%, while
question items number 3 and 5 are 50% and 83.33%.
It can be seen that the average percentage of correct
answers in the aspect of investing correctly is 84.67%
(high category).
Table 7 shows the percentage of respondents'
answers to each question item correctly. In Table 4.8,
it can be seen that the lowest level of financial literacy
among participants in the 2020 Polibatam capital
market, namely in terms of loans and credit
amounting to 78% and the highest is from the aspect
of insurance amounting to 93.33%.
5 CONCLUSIONS
Based on the results, it can be seen that the overall
level of financial literacy of respondents as a whole is
84.8%, or it can be said that the financial literacy level
of capital market school participants is categorized as
high. This result shows that each capital market
school participant's knowledge of financial literacy is
good enough. Polibatam capital market school
participants understand proper financial management
and can take advantage of financial products and
services and implement them in their daily lives.
From the results of the data analysis and conclusions
above, there are some suggestions, including the
following:
1. For capital market school participants
Overall, the level of financial literacy possessed
by capital market school participants can be said
to be good. Participants are expected to enhance
their more complex financial literacy further and
can choose investment alternatives with high
investment risks and adequate investment
knowledge.
2. For Polibatam capital market school organizers
Polibatam capital market school organizers can
adjust the content or material to be delivered to
capital market school participants with the
average level of financial literacy of capital school
participants.
3. For further researchers
Further researchers will be able to pay more
attention to factors such as age, gender,
achievement index value, and the respondent's
demographic background and pay more attention
to other determinants that are thought to affect the
personal level. So, it is hoped that further
researchers pay more attention to these factors to
obtain better data.
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