SMART-PLS ANALYSIS PAPER

1. Hypothesis and Research Model

1.1. Research Model

Figure 1. Analysis Model

Source: Processed Data (2024)

1.2 Research Hypothesis

The hypotheses of this research are as follows:

H1: Financial Self-Efficacy has a significant effect on Investment Behavior

H2: Financial Self-Efficacy has a significant effect on Digital Financial

Literacy H3: Financial Literacy has a significant effect on Investment Behavior

H4: Financial Literacy has a significant effect on Digital Financial Literacy

H5: Digital Financial Literacy has a significant effect on Investment Behavior

H6: Digital Financial Literacy mediates the relationship between Financial Self-Efficacy

and Investment Behavior

H7: Digital Financial Literacy mediates the relationship between Financial Literacy and

Investment Behavior

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 2. Minimum Sample Size

Minimum sample size is calculated using G-Power:

Figure 2. G-Power Calculation

Source: Processed Data (2024)

Based on G-Power calculation, minimum sample size needed is 108 respondents. However,

this research uses 120 respondents.

3. Sample Distribution

Table 1. Sample Distribution

Total and Name Stud. Name Stud. Name Name Stud. Name Stud.
Variable A B D E
Percentage Stud. C
Gender
Male 62 (51.7%) 15 (60%) 13 (56.52%) 10 (40%) 12 (52%) 12 (50%)
Female 58 (48.3%) 10 (40%) 10 (43.48%) 15 (60%) 11 (48%) 12 (50%)
Age
17-27 years old 51 (42.5%) 8 (32%) 10 (43.48%) 12 (48%) 10 (43.48%) 11 (45.83%)
28-40 years old 39 (32.5%) 8 (32%) 8 (34.78%) 8 (32%) 8 (34.78%) 7 (29.17%)
41-55 years old 24 (20%) 8 (32%) 3 (13.04%) 4 (16%) 4 (17.39%) 5 (20.83%)
> 55 years old 6 (5%) 1 (4%) 2 (8.7%) 1 (4%) 1 (4.35%) 1 (4.17%)
Residence
Java 98 (81.7%) 18 (72%) 20 (86.96%) 20 (80%) 19 (82.61%) 21 (87.5%)
Outside Java 22 (18.3%) 7 (28%) 3 (13.04%) 5 (20%) 4 (17.39%) 3 (12.5%)
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Total 120 (100%) 25 (20.83%) 23 (19.17%) (20.83%) 23 (19.17%) 24 (20%)
Source: Processed Data (2024)

Based on table 1, it is shown that from 120 respondents who fill the questionnaire, 62

(51.7%) respondents were male and 58 (48.3%) respondents were female. According to the

age range, 51 (42.5%) respondents were 17 to 27 years old, 39 (32.5%) respondents were

28-40

years old, 24 (20%) respondents were 41-55 years old, and 6 (5%) respondents were > 55 years

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old. According to the residence, 98 (81.7%) respondents were from Java and 22 (18.3%)

respondents were from outside Java. In conclusion, all respondents fulfilled the respondents'

characteristics.

4. Descriptive Statistics and Correlation

4.1 Descriptive Statistics

Table 2. Descriptive

Statistics

Standard
No Indicators Mean
Deviation
Financial Self-Efficacy
It is hard to stick to my spending plan when unexpected
1 4.24 0.686
expenses arise (FSE1)
It is challenging to make progress toward my financial goals
2 4.13 0.755
(FSE2)
When unexpected expenses occur I usually have to use
3 4.12 0.747
credit (FSE 3)
When faced with a financial challenge, I have a hard time
4 4.34 0.642
figuring out a solution (FSE 4)
I lack confidence in my ability to manage my finances (FSE 0.722
5 4.24
5)
Financial Literacy
1 I have proper knowledge of financial concepts (FL1) 3.93 0.857
I have skills in communicating financial concepts correctly
2 4.08 0.862
(FL2)
3 I have skills in managing personal finances properly (FL3) 3.78 0.852
4 I am able to make the right financial decisions (FL4) 3.85 0.816
I feel confident in effectively planning my financial needs
5 3.90 0.793
for the future (FL5)
Digital Financial Literacy
I have a good understanding of digital payment products,
1 such as E-Debit, E-Credit, E-Money, Mobile/Internet 3.93 0.837
banking, and E-Wallet (DFL1)
I have awareness about the potential financial risks of using
2 fintech, such as the legality of fintech providers, interest 3.80 0.894
rates, and transaction fees (DFL2)
I have the ability to manage financial activities through
3 digital platforms, such as managing costs for using digital 3.68 1.022
financial transactions (DFL3)
I have good control over financial activities using digital
4 3.69 1.011
platforms by evaluating expenses on the platform (DFL4)

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Investment Behavior
I am routinely investing money in savings to get extra
1 3.67 0.938
returns (IB1)
I am investing most of the savings through investment
2 3.74 0.921
instrument products (IB2)
3 I am investing savings in various companies (IB3) 3.61 0.973
I am investing savings in various investment instruments
4 3.48 0.943
(IB4)
Source: Processed Data (2024)

Table 2 shows the respondents’ answers for the independent variable which is

financial self-efficacy. It can be seen that most the respondents agree with the fourth

statement the most as it has the highest mean compared to other statements. This means that

most respondents think when faced with a financial challenge, they have a hard time figuring

out a solution. On the other hand, the third statement has the lowest mean compared to other

statements which is

4.12. It indicates less respondents agrees that when unexpected expenses occur, they usually

have to use credit. Moreover, among all the statements, the second statement has the highest

standard deviation, which indicates that the respondents’ answers are more heterogeneous for

this statement.

Next independent variable is financial literacy. It can be seen that most the

respondents agree with the second statement the most as it has the highest mean compared to

other statements. This means that most respondents think they have skills in communicating

financial concepts correctly. On the other hand, the third statement has the lowest mean

compared to other statements which is 3.78. It indicates less respondents agrees that they

have skills in managing personal finances properly. Moreover, among all the statements, the

second statement has the highest standard deviation, which indicates that the respondents’

answers are more heterogeneous for this statement.

The mediation variable which is digital financial literacy. It can be seen that most

respondents agree with the first statement, as it has the highest mean compared to other

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statements. This means that most respondents have a good understanding of digital payment

products, such as E-Debit, E-Credit, E-Money, Mobile/Internet banking, and E-Wallet. On

the

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other hand, the third statement has the lowest mean compared to other statements which is

3.68. It indicates that the majority of respondents disagree that they have the ability to

manage financial activities through digital platforms, such as managing costs for using digital

financial transactions. Moreover, among all the statements, the third statement has the highest

standard deviation, which indicates that the respondents’ answers are more heterogeneous for

this statement.

The dependent variable which is investment behavior. It can be seen that the most of

respondents agree with the second statement, as it has the highest mean compared to other

statements. This means that most respondents investing most of the savings through

investment instrument products. On the other hand, the fourth statement has the lowest mean

compared to other statements which is 3.48. It indicates that the less of respondents that

investing savings in various companies. Moreover, among all the statements, the third

statement has the highest standard deviation, which indicates that the respondents’ answers

are more heterogeneous for this statement.

4.2 Correlation between Variables

Table 3. Correlation between Variables

FSE FL DFL IB
FSE 1.000 0.292 0.467 0.334
FL 0.292 1.000 0.222 0.517
DFL 0.467 0.222 1.000 0.427
IB 0.334 0.517 0.427 1.000
Source: Processed Data (2024)

Table 3 shows the correlation between latent variables. All correlations between

variables are positive. The highest correlation is between financial literacy and investment

behavior, which is 0.517, indicating a medium positive correlation. The lowest correlation is

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between digital financial literacy and financial literacy, which is 0.222, indicating a low

positive correlation.

5. Outer (Measurement) Model Test

5.1 Factor (Indicator) Loading

The percentage of indicator variation that can be accounted for by the latent variable

is known as indicator reliability. There should be more than 0.70 in the outer loadings value.

Removing indicators with outer loading between 0.40 and 0.70 is necessary if composite

reliability and AVE increase (Hair et al., 2019).

Table 4. Outer Loadings

Digital
Financial Financial Investment
Financial
Indicators Self-Efficacy Literacy Behavior
Literacy
(FSE) (FL) (IB)
(DFL)
FSE1 0.767
FSE2 0.856
FSE3 0.804
FSE4 0.536
FSE5 0.688
FL1 0.856
FL2 0.849
FL3 0.870
FL4 0.896
FL5 0.891
DFL1 0.866
DFL2 0.909
DFL3 0.909
DFL4 0.896
IB1 0.876
IB2 0.883
IB3 0.893
IB4 0.802
Source: Processed Data (2024)

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 Table 4 shows the results of the outer loadings of the research to test indicator

reliability. In the first test, two indicator lower than 0.7 which are FSE4 and FSE5. According

to the rules, indicators with a loading factor less than 0.7 need to be eliminated. The

researcher eliminated FSE4 and FSE5 and re-run the test.

Table 5. Outer Loadings (Second Time)

Digital
Financial Financial Investment
Financial
Indicators Self-Efficacy Literacy Behavior
Literacy
(FSE) (FL) (IB)
(DFL)
FSE1 0.781
FSE2 0.879
FSE3 0.835
FL1 0.856
FL2 0.849
FL3 0.870
FL4 0.896
FL5 0.891
DFL1 0.867
DFL2 0.909
DFL3 0.910
DFL4 0.895
IB1 0.876
IB2 0.887
IB3 0.892
IB4 0.798
Source: Processed Data (2024)

In the second test, all indicators exceed 0.7, indicating that all indicators are suitable

for use in this research and the analysis can proceed to the next test.

5.2 Reliability Analysis

The reliability is evaluated by internal consistency, which considers the relationships

between the variables of the observed items. Cronbach’s alpha, composite reliability and rho_A

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are the metrics used to assess internal consistency. The level of those three measurements

must be greater than 0.70 but less than 0.95 (Hair et al., 2019). In addition, the value of

rho_A should between cronbach’s alpha and composite reliability.

Table 6. Reliability Test

Cronbach's Composite
Variable Rho_A
Alpha Reliability
Financial Self-Efficacy (FSE) 0.788 0.827 0.872
Financial Literacy (FL) 0.922 0.926 0.941
Digital Financial Literacy (DFL) 0.918 0.923 0.942
Investment Behavior (IB) 0.887 0.895 0.922
Source: Processed Data (2024)

Table 6 shows the results of reliability test which is used to test the internal

consistency. The values of cronbach’s alpha and composite reliability for each of the variable

exceed the value of 0.7 and below 0.95. The value of of rho_A for each of variable exceed

0.7 and the value is between cronbach’s Alpha and composite reliability. This indicates that

all of the variables used are reliable since they can meet the threshold.

5.3 Convergent Validity

The degree of agreement between different indicators of the same construct that are

correlated with each other is measured by convergent validity. Average variance extracted

(AVE) are taken into account for convergent validity. For convergent validity, the AVE value

needs to be greater than 0.5 (Hair et al., 2019).

Table 7. Average Variance Extracted

Average Variance Extracted

Variable
(AVE)
Financial Self-Efficacy (FSE) 0.694
Financial Literacy (FL) 0.761
Digital Financial Literacy (DFL) 0.802
Investment Behavior (IB) 0.747
Source: Processed Data (2024)

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 As depicted in table 7, it can be seen that all of the variables have reached the minimum

acceptable AVE value of 0.5. This means all variables used in this research are valid.

5.4 Discriminant Validity

The degree to which the constructs are genuinely different from one another is known

as discriminant validity. It also measures the degree to which the overlapping constructs

diverge from one another. In discriminant validity, it is necessary to evaluate the heterotrait-

monotrait (HTMT) ratio of correlation, cross-loading of the indicator, and the fornell and

larcker criterion. For Fornell-Larcker, the square root of AVE for each construct is higher

than the correlation between the construct and any other construct. For cross loading, the

loading value of an indicator to its latent variable is larger than its cross-loading values to

other latent variables in the model. For HTMT, all the values are less than 0.9. (Hair et al.,

2019).

Table 8. Fornell-Lacker Criterion

Digital
Financial Financial Investment
Financial
Variable Self-Efficacy Literacy Behavior
Literacy
(FSE) (FL) (IB)
(DFL)
Financial Self-Efficacy
0.833
(FSE)
Financial Literacy (FL) 0.292 0.873
Digital Financial Literacy
0.334 0.517 0.895
(DFL)
Investment Behavior (IB) 0.467 0.222 0.427 0.864
Source: Processed Data (2024)

Table 8 shows the results of the Fornell-Larcker Criterion which is used to test the

discriminant validity. Based on the data above, it can be seen that the square root of AVE of

latent variable is larger than the correlation with different variables. These results confirm

that the variables being used in this research are valid.

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 Table 9. Cross Loading

Digital
Financial Self- Financial Investment
Indicators Financial
Efficacy (FSE) Literacy (FL) Literacy (DFL) Behavior (IB)
FSE1 0.781 0.245 0.203 0.207
FSE2 0.879 0.286 0.326 0.404
FSE3 0.835 0.209 0.279 0.478
FL1 0.283 0.856 0.456 0.216
FL2 0.342 0.849 0.473 0.184
FL3 0.18 0.87 0.371 0.141
FL4 0.219 0.896 0.457 0.17
FL5 0.234 0.891 0.479 0.244
DFL1 0.308 0.423 0.867 0.317
DFL2 0.284 0.45 0.909 0.362
DFL3 0.344 0.421 0.91 0.45
DFL4 0.264 0.545 0.895 0.391
IB1 0.396 0.216 0.387 0.876
IB2 0.482 0.229 0.383 0.887
IB3 0.382 0.153 0.355 0.892
IB4 0.339 0.161 0.346 0.798
Source: Processed Data (2024)

Based on Table 9, the factor loading indicators on the assigned construct are higher

than all loading on other constructs. According to cross loading result, discriminant validity is

already established. These results confirm that the indicators being used in this research are

valid.

Table 10. Heterotrait-Monotrait Ratio (HTMT)

Digital
Financial Financial Investment
Financial
Variable Self-Efficacy Literacy Behavior
Literacy
(FSE) (FL) (IB)
(DFL)
Financial Self-Efficacy (FSE)
Financial Literacy (FL) 0.341
Digital Financial Literacy
0.379 0.554
(DFL)
Investment Behavior (IB) 0.513 0.239 0.470
Source: Processed Data (2024)

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 Table 10 shows the results of the Heterotrait-Monotrait Ratio (HTMT) which is used

to test the discriminant validity. It shows that all correlations between variable HTMT are

lower than 0.9 therefore discriminant validity is established. These results confirm that the

variables being used in this research are valid.

6. Inner (Structural) Model Test

6.1 Inner Model Multicollinearity

Hair et. al. (2019) stated that the model does not face multicollinearity issue if VIF

value is less than 5. Based on Table 11, all indicators VIF less than 5 means no

multicollinearity occurs in the inner model.

Table 11. Multicollinearity Test

Digital
Financial
Financial Self- Financial Investment
Literacy
Efficacy (FSE) Literacy Behavior (IB)
(FL)
(DFL)
Financial Self-Efficacy (FSE) 1.343 1.094
Financial Literacy (FL) 1.105 1.094
Digital Financial Literacy
(DFL)
Investment Behavior (IB) 1.292
Source: Processed Data (2024)

6.2 Direct and Indirect Fffect

6.2.1 Direct Effect

The direct effect refers to the impact that one variable has on another without being

mediated by any other variables. It quantifies the strength and direction of the relationship

between two variables. A p-value is used to determine the significance of this direct effect. A

p-value that less than 0.05 indicates the relationship is significant (Hair, et. al., 2019)

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 Table 12. Path Coefficients

Path Original Sample t-statistics p-values Statement

DFL -> IB 0.299 2.961 0.003 The hypothesis is accepted
FL -> DFL 0.094 0.989 0.323 The hypothesis is rejected
FL -> IB 0.431 5.118 0.000 The hypothesis is accepted
FSE -> DFL 0.44 6.427 0.000 The hypothesis is accepted
FSE -> IB 0.068 0.704 0.482 The hypothesis is rejected
Source: Processed Data (2024)

According to Table 12, p-value for path FL to DFL and FSE to IB is more than 0.05 therefore

the hypothesis is rejected. Meanwhile the rest of the direct effect hypothesis is accepted.

6.2.2 Indirect Effect

In contrast to testing only on the direct effect between variables, Hair et al. (2019)

suggest that when conducting a mediation test, the researcher should also examine the

indirect effect between independent and dependent variables using a mediation variable.

Table 13 presents the test's outcomes.

Table 13. Specific Indirect Effects

Original
Path t-statistics p-values Statement
Sample
FL -> DFL -> IB 0.028 0.966 0.334 The hypothesis is rejected
FSE -> DFL -> IB 0.132 2.820 0.005 The hypothesis is accepted
Source: Processed Data (2024)

According to Table 13, p-value for indirect path for FL to DFL to IB is more than 0.05

therefore the hypothesis is rejected. Meanwhile the p-value for indirect path for FSE to DFL

to IB is less than 0.05 therefore the hypothesis is accepted. The mediation effect of digital

financial literacy on the relationship between financial self-efficacy and investment behavior

is full mediation because the direct effect is not significant while the indirect effect is

significant.

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6.3 R-square (Coefficient of Determination)

R square refers to a statistical measure that represents the proportion of the variance

for a dependent variable that is explained by an independent variable or variables in a

regression model. It will have a range of 0 to 1. The R2 values of 0.75, 0.50, and 0.25 can be

considered substantial, moderate, and weak, respectively (Hair, et. al., 2019).

Table 14. R Square Test

R Square
Variable R Square
Adjusted
Digital Financial Literacy (DFL) 0.226 0.213
Investment Behavior (IB) 0.373 0.357
Source: Processed Data (2024)

As depicted in Table 14, the R-square value of digital financial literacy is 0.226,

whereas, the R-square value of investment behavior is 0.373. This indicates that investment

behavior (37.3%) can be explained using the three variables mentioned above, namely,

financial self-efficacy, financial literacy, and digital financial literacy. While the other 62.7%

might be explained by other factors that are not included in this study research. From these

results, it can be stated that the R-square values of both variables are weak since neither the

value of the digital financial literacy variable nor the value of the investment behavior

variable exceeded the value of 0.50. This suggests that the number of variables used in this

research is very limited and that other variables are more effective than the variables used in

this research.

6.4 f-Square (Effect-size)

The difference in R-square that occurs when an exogenous variable is removed from

the model is computed using F-square. It describes how numerous different factors could

affect

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a structural model. The values greater than 0.02, 0.15, and 0.35, respectively, are classified as

small, medium, and large effect sizes (Hair et al, 2019).

Table 15. f-square Test

Digital Financial Investment

Variable
Literacy (DFL) Behavior (IB)
Digital Financial Literacy
0.110
(DFL)
Financial Literacy (FL) 0.010 0.268
Financial Self-Efficacy
0.228 0.006
(FSE)
Investment Behavior (IB)
Source: Processed Data (2024)

Table 15 shows the f-square of the variables used in this research study. With this

being said, it can be affirmed that the f-square effect size of the first independent variable

(financial self-efficacy) with the mediation variable (digital financial literacy) is considered

medium since the values have exceeded 0.15 but are still below 0.35. Meanwhile, the f-

square effect size of the second independent variable (financial literacy) with the mediation

variable (digital financial literacy) is considered have no effect since the value not exceed

0.02.

The f-square effect size on the relationship between financial self-efficacy and

investment behavior is considered have no effect since the values not greater than 0.02. On

the other hand, The f-square effect size on the relationship between financial literacy and

investment behavior is considered medium since the values are higher than 0.15 but below

0.35. Lastly, the f square effect size on the relationship between digital financial literacy and

investment behavior is considered weak since the values are higher than 0.02 but lower than

0.15.

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6.5 Q-Square (Blindfolding)

The predictive relevance of a model is measured by Q-square. Q-square values for a

given endogenous construct must be greater than zero to demonstrate the predictive accuracy

of the structural model for that construct. Values greater than 0, 0.25, and 0.5, respectively,

indicate predictive relevance (Hair et al., 2019).

Table 16. Q-Square Test

Variable Q²
Digital Financial Literacy (DFL) 0.155
Investment Behavior (IB) 0.283
Source: Processed Data (2024)

As shown in Table 16, the Q-square predictive relevance of both digital financial

literacy and investment behavior variables are 0.155 and 0.283 respectively. Digital financial

literacy variable regression model has small predictive relevance while investment behavior

model has medium predictive relevance. These independent variables are said to be accurate

and valid to predict the Y variable since the Q square values have all surpassed the minimum

required value of 0.

7. Conclusion

Based on the data analysis, the conclusions of this research are as follows:

a. Financial self-efficacy has a significant effect on Investment Behavior

b. Financial Self-Efficacy has a significant effect on Digital Financial Literacy

c. Financial Literacy has a significant effect on Investment Behavior

d. Financial Literacy does not affect digital Financial Literacy

e. Digital Financial Literacy has a significant effect on Investment Behavior

f. Digital Financial Literacy fully mediates the relationship between Financial Self-

Efficacy and Investment Behavior

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g. Digital Financial Literacy cannot mediate the relationship between Financial

Literacy and Investment Behavior.

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 ATTACHMENT

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