Enhancing Financial Inclusion and Capital Markets: Stock and Mutual Fund Studies

UPN Veteran Yogyakarta, Yogyakarta, Indonesia

^* Corresponding author: rinidwiastuti@upnyk.ac.id

Abstract

The relationship between financial inclusion and capital markets, especially stocks and mutual funds, is always an interesting topic to explore empirically in the Indonesian context. Therefore, this exploratory study aims to uncover the problem. In addition, macroeconomic stability plays an important role in influencing financial risk, where risk is one of the main factors influencing investment decisions as suggested by traditional financial theory, so it is interesting to investigate the effect of this variable on stock and mutual fund investment. This study conducted a time series analysis through a vector autoregressive model and granger causality to link financial inclusion, stock and mutual fund investment, and macroeconomic variables. The results of the study indicate that capital market performance fluctuates following the economic business cycle and investor confidence. Macroeconomic stability determines capital market performance in Indonesia. Increased transactions in the stock and mutual fund markets encourage increased financial inclusion through increased public savings.