Understanding Generation Z’s Financial Behavior: Determinants of Propensity Toward Indebtedness in Jabodetabek

English

Abstract

This study aims to analyze the factors influencing the propensity toward indebtedness and to examine the role of religiosity as a moderator in the relationship between emotion and the propensity to incur debt among Generation Z in the Jabodetabek area. A quantitative approach was employed using purposive sampling to survey 400 Generation Z respondents residing in Jakarta, Bogor, Depok, Tangerang, and Bekasi. Data were collected via a questionnaire comprising six constructs: emotion, financial literacy, materialism, religiosity, risk perception, and propensity toward indebtedness, each measured by five indicators. Data were analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS. The results indicate that financial literacy, materialism, religiosity, and risk perception shape the propensity toward indebtedness, whereas emotion is not a direct determinant. Furthermore, religiosity neither strengthens nor weakens the relationship between emotion and the propensity toward indebtedness. This study contributes to the literature by integrating cognitive, behavioral, consumption-related, risk perception, and personal value factors to explain the propensity to incur debt among Generation Z amidst rising access to digital financial services.