Assessing the Investors' Acceptance of Electronic Stock Trading in a Developing Country: The Mediating Role of Perceived Risk Dimensions

Assessing the Investors' Acceptance of Electronic Stock Trading in a Developing Country: The Mediating Role of Perceived Risk Dimensions

Safeer Ullah Khan (Donlinks School of Economics and Management, University of Science and Technology Beijing, Beijing, China), Xiangdong Liu (Donlinks School of Economics and Management, University of Science and Technology Beijing, Beijing, China), Ikram Ullah Khan (Institute of Management Sciences, University of Science and Technology, Bannu, Pakistan), Cheng Liu (Donlinks School of Economics and Management, University of Science and Technology Beijing, Beijing, China) and Muhammad Imran Rasheed (Department of Management Sciences, Islamia University of Bahawalpur, Bahawalpur, Pakistan)
Copyright: © 2020 |Pages: 24
DOI: 10.4018/IRMJ.2020010104

Abstract

This study explores the factors that reduce the impact of negative factors on investors' Behavioral Intentions (BIs) to use Electronic Stock Trading (EST) in Pakistan. It investigates the impact of awareness-knowledge and perceived trust on EST adoption. Using a questionnaire-based survey, data were collected from 347 experienced investors, and were analyzed through structural equation modeling. The results indicate that awareness-knowledge, perceived trust, and risk dimensions (including time, financial, performance, social, privacy, and opportunity cost risks) have a significant impact on BI. Moreover, all the risk dimensions partially mediate the relationship between awareness-knowledge and BI, as well as between perceived trust and BI. The study enriches theory and practice by providing implications for promoting EST in developing countries, especially in Pakistan.
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1. Introduction

Facing stiff competition in the market, securities firms have started to provide online services by investing heavily in information technology (IT) to outwit competition (Abroud, Choong, Muthaiyah, & Fie, 2015). The security firms now provide the same stock trading service online as the traditional brokers do telephonically. The online security firms provide internet-based access to investors for conducting trade in securities. Compared with the traditional phone-based investment method, electronic stock trading (EST) has significant advantages for both parties, i.e., securities issuers (firms) and e-investors. Electronic stock trading enables the firms to increase revenue by serving more customers even while reducing their operational expenses, as the e-services require less staff and physical office space (Khan, Liu, Khan, Liu, & Hameed, 2018). The advantages of electronic stocking for investors include lower transaction fees, faster speed, receiving of news, checking of quotations, and performing of transactions at any time and from anywhere within twenty-four hours, seven days a week (Tai & Ku, 2013).

As online technology is getting entwined with the financial management of investors, its adverse impacts are also mushrooming. Therefore, despite the rapid growth of the internet userbase and the multiple advantages that EST offers to investors, the adoption rate of stock trading is still low (Tai & Ku, 2013). In this respect, prior studies on EST identified various success (positive) and resistance (negative) factors by using information system adoption models such as the Technology Acceptance Model, Theory of Reasoned Action, Theory of Planned Behavior, Unified Theory of Acceptance, and Use of Technology (Lee-Partridge & Ho, 2003; Lee, 2009b; Ramayah, Rouibah, Gopi, & Rangel, 2009; Singh, Sandhu, & Kundu, 2010; Tai & Ku, 2013). Although, these empirical studies have identified influential antecedents of EST by analyzing the models and have explored causal relationships. Yoon and Steege (2013) argued that considering causal relationships in information technology (IT) or investigating influential antecedents may not accurately reflect users’ usage decision-making. Kim, Mirusmonov, and Lee (2010) reported that security concerns negatively impact users’ intention for e-channels, but despite security concerns, many people use e-channels. This indicates that there are factors which could both decrease risk perception and positively affect IT adoption, factors that have not yet been explored by the EST literature. Therefore, to predict and explain the complex phenomenon of EST, it is expedient to identify the factors that could reduce the impact of risk perceptions and also positively influence EST adoption, which will help the practitioners in formulating right policies to increase the use of EST among current and potential investors.

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