The role of risk tolerance in linking psychological biases and financial literacy to gen z stock trading frequency

Efendi, M. Zaenal and Fitriyah, Fitriyah ORCID: https://orcid.org/0009-0000-9402-9370 (2026) The role of risk tolerance in linking psychological biases and financial literacy to gen z stock trading frequency. Sentralisasi, 15 (2). pp. 262-293. ISSN 2614-4328

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Abstract

Positioning risk tolerance as a mediating variable, this study investigates the extent to which overconfidence, optimism bias, and financial literacy shape stock trading frequency among Generation Z investors in Malang City. A quantitative approach with an explanatory design was employed, with purposive sampling used to select 100 respondents. Data were gathered through a questionnaire instrument and subsequently analyzed using SmartPLS 4.0 software via SEM-PLS method. The results indicate that overconfidence, optimism bias, and financial literacy all bear a positive and significant influence on risk tolerance. Interestingly, not one of these three variables was found to produce a direct effect on stock trading frequency. Risk tolerance was demonstrated to serve as a full mediator in the relationship between the independent and dependent variables, while at the same time yielding a significant positive effect on trading frequency. These findings point to the conclusion that the trading behavior of Generation Z investors in Malang City is governed far more by their individual level of risk tolerance than by psychological or cognitive factors operating in isolation.

Item Type:	Journal Article
Keywords:	overconfidence; optimism bias; financial literacy; risk tolerance; trading frequency
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150205 Investment and Risk Management
Divisions:	Faculty of Economics > Department of Management
Depositing User:	Fitriyah Fitriyah
Date Deposited:	17 Jul 2026 08:48

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