ABSTRACT
Risk is an important factor that should be considered in every investment decision, especially for international business. Higher risk tends to decrease the motivation of investors to invest their wealth in a stock market and vice versa. The purpose of this study is to examine the impact of political risk, financial risk and economic risk on investment decision to trade in Islamic stocks in Indonesia. Quantitative research method was used in this study, and data were analyzed using regression analysis using views. Islamic Sharia Stock Index, ISSI, listed in Indonesia Stock Exchange would be used to best represent the transaction of Islamic Stocks in Indonesia’s capital market. Empirical results showed economic risk negatively and significantly affect the trade volume of ISSI. While political risk insignificantly influenced the trading volume with a negative direction. On the other hand, the financial risk positively and significantly influenced the trade volume. Simultaneously, all risks show significant influence on the dependent variable. Few papers discuss how risks explicitly influenced the decision to invest in Islamic Stocks, especially in Indonesia. Our suggestion for investors is to assess the risks and put under control to minimize the potential loss.
