Introduction
Derivatives are essential financial instruments that derive their value from underlying assets, functioning as contracts for predefined future transactions They serve as effective tools for managing and mitigating risk, particularly in response to fluctuations in asset values Additionally, derivatives act as hedging instruments against the volatility of commodity prices The derivatives market is primarily divided into two segments: the financial derivatives market and the commodity derivatives market This study specifically focuses on the financial derivatives market within the context of the Vietnam stock market.
The Vietnam stock market, established over 11 years ago, has experienced significant growth, featuring two major exchanges: the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX) With nearly 89 securities companies and over 700 listed firms, the market's capitalization surpassed $32 billion by 2013, accounting for 25% of the country's GDP Investor participation has surged, with more than 1.3 million trading accounts, including approximately 16,000 held by foreign investors, reflecting a 3.5-fold increase since 2007 Daily trading values across both exchanges have exceeded 5 trillion VND, indicating a robust demand for securities investment in Vietnam.
Despite over 13 years of development, Vietnam's stock market lacks a derivatives market to help investors hedge against price fluctuations, leading to diminished trust among small investors due to macroeconomic uncertainty and financial risks Currently, the market offers only basic investment tools like stocks, bonds, and fund certificates However, after extensive preparation, the derivatives market is set to launch soon with the introduction of the first traded futures contract While this trading form is still relatively new for many investors, its emergence is expected to enhance the vibrancy and diversity of the stock market, ultimately improving investor knowledge and skills as the derivatives market evolves.
In the body of literature, there are a wide range of studies examined the behavioral intention of customers including Jeong & Lambert (2001), Burton, Sheather & Roberts (2003), Liu, Lu, Marchewka & Yu (2004), Amoako &
Numerous studies have explored behavioral intentions within the financial market, including significant contributions from Gyampah (2007), Gu, Lee & Suh (2009), and Han & Kim (2010) Key research in this area has also been conducted by Berry, Parasuraman & Zeithaml (1996), Athanassopoulos (2000), Auh, Bell, McLeod & Shih (2007), Keh & Xie (2009), and Bolton, Bitner & Mende, highlighting the importance of understanding consumer behavior in financial contexts.
Recent studies have highlighted the importance of understanding the behavioral intentions of investors in Vietnam's derivatives markets Utilizing the Theory of Planned Behavior (TPB), which has been validated as an effective predictor of various human behaviors, this research aims to identify key factors influencing investor behavior The TPB is recognized for its robust applicability in numerous studies related to behavioral intention, making it a valuable framework for analyzing individual investor behavior By adopting a behavioral approach, this study seeks to enhance the understanding of investor perceptions across different derivatives markets.
Derivatives are essential financial instruments used by large corporations to effectively manage exchange rate risk and financial expenses Studies indicate their significant role in risk management, utilizing tools such as call and put options, as well as forward and futures contracts to mitigate market risks As derivatives continue to evolve, they contribute to the robust and diversified development of global financial markets, playing a crucial role in the financial and monetary system While they offer effective risk prevention features that cater to various market participants, their complexity necessitates careful management to avoid potential economic instability.
In Vietnam, the use of currency and commodity derivatives has been established for many years, with the Buon Me Thuot coffee trading center founded in 2006 to facilitate coffee trading through spot and forward contracts The adoption of currency derivatives has expanded among domestic and foreign commercial banks, incorporating various instruments such as swaps, options, and futures contracts The financial derivatives market is set for establishment and growth in the near future, starting with the introduction of two basic futures contracts: those based on the VN30 and HNX30 stock indices, as well as futures on government bonds, with additional derivative contracts planned for future release.
In the derivatives market, there are four main contributing factors to the derivative market: infrastructure, legal framework, products and people (Hull,
2006) In recent years, the government has developed, developed and prepared the legal framework and technical infrastructure to operate the derivatives market
The government faces challenges in enhancing human factors, unlike the upgrades made to infrastructure and legal frameworks Various models of human behavior apply to different situations, leading to diverse predictions for distinct problems In financial contexts, individual investor behavior varies significantly across different financial products (Mullainathan & Thaler, 2000; LeBaron, 2001; Shiller, 2002) The effectiveness and growth of the derivative financial market hinge on the participation of individual investors Internal factors such as education, experience, gender, and culture, along with psychological influences, shape individual investor behavior Despite a trend towards professionalism among investors, empirical evidence suggests that the VN-Index exhibits non-random behavior, largely due to psychological factors impacting their decisions (Phan & Chu, 2014) Consequently, even when grounded in rational analysis, investor decisions are often swayed by these psychological influences (Murgea, 2008; Sehgal & Singh, 2012).
This study is essential for understanding investor attitudes toward derivative financial instruments in Vietnam, especially with the recent launch of the derivative financial market Additionally, it aims to identify the factors influencing investors' intentions to utilize these instruments effectively.
This study aims to investigate the key factors influencing Vietnamese investors' decisions to engage in the financial derivative market, which officially launched on August 10, 1977 Since its inception, the Vietnamese State Securities Commission has granted trading eligibility certificates for derivative securities to several firms, including Saigon Securities Inc.
This study focuses on investors engaged with five prominent securities companies in Vietnam: SSI, Vietnam Prosperity Securities Company (VPBS), Vietnam Securities Corporation (BSC), MB Securities (MBS), and VNDIRECT Securities (VND).
This study aims to enhance understanding of investor behavior in Vietnam's derivative securities market by identifying the factors that influence individual investors Understanding these behaviors is crucial for both brokers and the State Security Commission of Vietnam, as it can lead to improved usage of derivative instruments for risk management in investing Ultimately, this knowledge can contribute to increased market liquidity and a rise in the number of investors participating in Vietnam's stock market.
Theoretical background and hypotheses
Foundational Theory
The Theory of Planned Behavior (TPB), developed by Ajzen and Fishbein in 1980, is a groundbreaking framework in psychosocial research It is extensively utilized in scientific studies to gain insights into human behavior.
Research by Ajzen (1985, 1991, 2002) has extensively explored the connection between intention and behavior, demonstrating its empirical validity across various fields Numerous studies, including those by Ajzen (1988) and Ajzen & Fishbein (1980), as well as Canary & others, have confirmed this relationship, highlighting its significance in understanding human actions.
Seibold, 1984; Sheppard, Hartwick, and Warshaw, 1988) It wasdeveloped from the theory of reasoned action (TRA)by (Ajzen and Fishbein 1980)
The Theory of Reasoned Action (TRA) emphasizes the motivational factors influencing personal behavior, primarily through two key components: attitude towards behavior (AT) and subjective norms (SN) Despite its widespread acceptance in academic literature, TRA has limitations, particularly regarding individuals' inability to act due to a lack of opportunities or resources such as time, capital, and skills To address these shortcomings, Ajzen (2002) introduced an additional variable, perceived behavioral control (PBC), which evolved the original TRA into the Theory of Planned Behavior (TPB).
Perceived behavioral control reflects the ease or difficulty of performing the behavior and whether the behavior is controlled or restricted (Ajzen, 1991) The TPB model is shown in figure 1
Figure 1 The theory of planned behavior – (Ajzen, 1991)
The theory of planned behavior (TPB) suggests that perceived behavioral control (PBC) influences investor actions in two key ways: it shapes intentions and directly impacts behaviors Additionally, both internal factors—such as feelings, knowledge, experiences, and skills—and external factors, including financial resources, time, and partnerships, play a significant role in guiding investor decisions TPB identifies three primary components: behavioral attitudes, subjective norms, and perceived behavioral control, all of which have been validated through extensive research.
Behavioral intentions have traditionally been influenced by attitudes, subjective norms, and perceived behavioral control, with the Theory of Planned Behavior (TPB) demonstrating reliability and effectiveness through extensive empirical research This theory has been instrumental in predicting human behavior across various domains, including business (Krueger & Carsrud, 1993), the analysis of negative habits (Chang, 1998), and tobacco control behaviors among adults (Hu & Lanese, 1998) Beyond individual behavior prediction, TPB is also applicable in community-beneficial contexts, such as resource sharing within organizations (Bolloju, 2005) and decision-making processes in human resource management (Carpenter &).
The Theory of Planned Behavior (TPB) has been utilized to examine intentions across various contexts, including online shopping (Hsieh & Rai, 2008), the adoption of technology in households (Pavlou & Fygenson, 2006), and the use of credit cards (Rutherford & DeVaney, 2009).
TPB is widely used in the financial and securities markets (Gopi &
Ramayah, 2007) Gopi and Ramayah (2007) use TPB to study the intent of online home-based business, or use internet banking for securities trading (Serkan, 2004)
The Theory of Planned Behavior (TPB) is an effective model for predicting individual behavior, as demonstrated in East's 1993 study, which successfully forecasted short-term actions of securities investors Ajzen (2005) highlights that individuals are more likely to take action when they have a positive evaluation of the behavior, perceive social pressure to act, and believe they possess the necessary resources and opportunities This framework effectively elucidates the key factors influencing investment behavior.
The Vietnamese stock market has a long history of development, yet limited research has utilized the Theory of Planned Behavior (TPB) to analyze stock investment behavior Previous studies predominantly concentrated on behavioral finance theory, financial literacy, and demographic factors influencing investment decisions Recently, derivatives have emerged as a valuable risk management tool in securities trading within Vietnam This prompted the author to adopt TPB as a theoretical framework to create a research model aimed at examining the intention to use derivatives in securities investment in Vietnam.
Research model and hypotheses
The Theory of Planned Behavior (TPB) has numerous applications in understanding human behavior and has been validated through extensive global research This article proposes a research model aimed at identifying the factors that influence the intention to use derivatives in securities investments The primary goal is to explore these influencing factors and their interrelationships within the model Additionally, the author highlights psychological determinants that indirectly affect the intention to use derivatives, as noted by Phan & Zhou (2014) The subsequent sections will outline the research model and associated hypotheses.
Behavioral intentions, as defined by the Theory of Planned Behavior (TPB), refer to the intentions to engage in specific actions, such as usage in this study This positions behavior as a dependent variable in numerous experimental research utilizing TPB Empirical studies have consistently demonstrated the significance of behavioral intent, with Ajzen (1991) noting that motivation factors within the TPB model greatly influence these intentions Ultimately, behavioral intentions indicate an individual's willingness to take action or pursue a particular behavior.
Therefore, the intention to use derivative indicates that investors are likely to use derivative in securities trading
Attitude refers to how positive or negative emotions influence specific behaviors, as defined by Fishbein and Ajzen (1980) It is assessed through an individual's beliefs and appreciation for those behaviors, making attitudes essential for predicting future actions Moreover, attitudes have evolved to encompass reactions to various objects, as noted by Ajzen and Fishbein (2000).
Attitudes significantly influence behavioral intentions; individuals with positive attitudes are more likely to engage in certain behaviors, while those with negative attitudes tend to avoid them or even criticize such actions (Gibler & Nelson, 1998) This strong relationship underscores that attitude is a crucial determinant of personal behavior, affecting whether individuals choose to act or refrain from acting.
Ajzen and Fishbein (1980) define attitude toward behavior as the overall evaluation of one's feelings of favorableness or unfavorableness towards a concept This attitude is influenced by various factors, with Phan and Zhou (2004) identifying four key psychological influences: overconfidence, excessive optimism, herd behavior, and risk aversion Consequently, attitude toward behavior is viewed as a dependent variable shaped by these four factors.
Overconfidence refers to an excessive belief in one's own knowledge and decision-making abilities, particularly evident in the stock market (Barberis & Thaler, 2003) Many investors exhibit this trait, mistakenly believing in their superior understanding of market dynamics, despite their actual performance often falling short of expectations This disconnect leads them to confidently select what they think are the best stocks and optimal selling times, ultimately resulting in disappointing transaction outcomes.
Excessive confidence significantly impacts decision-making, often leading investors to overlook critical data essential for informed investment choices This overconfidence can result in poor investment decisions, as highlighted by various studies (Odean, 1998; Wang, 2000; Gervais & Heaton, 2002; Grinblatt & Keloharju, 2009; Montier, 2009) Additionally, it plays a crucial role in the utilization of derivatives in securities transactions.
Many investors exhibit overconfidence in their trading abilities, leading them to forgo essential risk control measures, especially when dealing with derivatives This overconfidence often results in high-frequency trading, which amplifies market volume and volatility, ultimately diminishing their expected returns (Gervais, Heaton, 2002).
Therefore, the confidence of a person's ability to directly influence the investment attitude, leading to more frequent transactions
Overconfident investors often overestimate their investment knowledge and abilities, leading them to overlook the realities of the market and the stocks they own This excessive optimism, which combines overconfidence with an unrealistic outlook, becomes particularly problematic during market downturns They tend to believe that negative market conditions are temporary and will have minimal impact on their portfolios.
Or they believe that their portfolios are very good, will rebound in a short time so there is no need to sell (Wang, 2001, Gervais & Heaton, 2002; Johnson &
Excessive optimism can lead investors to expand their portfolios, driven by the belief in imminent market improvements and the potential for high short-term returns (Lindblom, 2002; Johnsson & Lindblom, 2002) The investor's sentiment significantly influences their trading strategies; when feeling optimistic, they may avoid using derivatives, but as their optimism wanes, they are more likely to employ derivatives as a protective hedge.
Herd behavior in stock investment refers to the tendency of investors to mimic the actions of others, often reacting quickly to the decisions of a particular investor This phenomenon occurs when individuals base their trading choices on the perceived success of another investor's performance, leading to a collective movement in the market.
Bikhchandani & Sharma, 2000; Hwang & Salmon, 2004) If this happens in small quantities, it will not affect the market
When numerous investors follow the actions of reputable investors, it can significantly impact the market, potentially resulting in overvalued stock prices and heightened investment risks These followers are often referred to as unreasonable investors.
Dependending too much on the individual or organization will lead to that organization having a great influence on the market, thereby increasing investment risk (Barber & Odean, 2009)
Herd behavior significantly influences investor actions, with those exhibiting strong herd tendencies often neglecting derivatives for risk management In contrast, investors displaying low herd behavior are more inclined to utilize derivatives as effective tools for mitigating risk associated with their investment decisions.
Risk in the financial sector refers to the unpredictability of unforeseen decisions or incidents Tversky and Kahneman's prospect theory (1974) highlights that decision-making under uncertainty often deviates from traditional probability rules A key aspect of this theory is risk aversion, which suggests that individuals generally prefer to avoid risk when in a "profitable zone" but may exhibit risk-seeking behavior when facing losses.
Risk-averse investors tend to seek out opportunities in high-risk market fluctuations, while those with low risk aversion prefer to engage in trading only when they feel a sense of safety and security (Olsen, 2007).
Research methodology
Research approach
Quantitative and qualitative research methods are fundamental to scientific inquiry Quantitative research focuses on experimental surveys and organic observations, utilizing various forms of statistics, mathematics, and computer engineering This approach is essential for the research, development, and application of theories, hypotheses, and models related to the subject of study By employing quantitative methods, researchers can verify quantitative relationships, with measurement data typically represented as percentages, means, and standard deviations.
Qualitative research remains a valuable investigative method across various fields, despite its long-standing application This approach enables researchers to synthesize and derive insights from authenticated information and previous studies, offering an objective measurement of subjects and phenomena Key questions guiding qualitative research include "what, where, when, and how?" Typically, qualitative studies involve small sample sizes (Sogunro, 2001).
Quantitative methods are formalized approaches used to measure problems through statistical data, allowing researchers to assess attitudes, views, and behaviors, and extrapolate results to a larger population These methods enable the construction of exposure factors and models based on measurement data Additionally, quantitative data collection is more structured compared to qualitative methods Neuman (2006) presents a quantitative approach that integrates various techniques, including online surveys, offline methods, telephone interviews, and organized monitoring activities.
To explore the level and test the relationships for the studied object, this research will utilize quantitative methods The research process consists of nine distinct steps outlined below.
Figure 3 Main steps of research process
Questionnaire design
The questionnaire is distributed in two ways, online surveys and hard copies
To guarantee an adequate sample size, it is essential to recognize that the pool of knowledgeable respondents regarding derivatives is quite limited The questionnaire has been translated into Vietnamese, ensuring that all questions are concise, straightforward, and easily comprehensible to avoid any confusion.
There are two forms of measurement scales in this questionnaire design:
• Nominal scale: present data into categories (Crossman, 2009)
• 5-point Likert scale: level of agreement or disagreement with each of a series of statement (Naresh, 2009) The range from 1 to 5 corresponds to strongly disagree and strongly agree
The questionnaire included two parts The first part was respondents’ demographics included age, gender and education displayed in categories questions
The last part was main survey displayed in 5-point Likert scale questions
Variable Code Measurement Statements Adapted from
OVC1 I am confident in my ability to trade securities
OVC2 I am confident in the holding stock will rise OVC3 I am confident in market information OVC4 There is no need to use derivative to reduce risk
EO1 I do not sell stocks when the market is plummeting EO2 I trust the stock will rise
EO3 I believe that the market will stabilize after several sessions of declines
EO4 There is no need to use derivative when the market shows signs of deterioration
HB1 I invest by following the specialist ‘s portfolio HB2 I invest by following friend’s portfolio
HB3 I invest in stocks according to the crowd
HB4 I sold out when I saw a large number of sellers HB5 I bought into stock being bought a lot
RA1 I have low risk tolerance
RA3 I like to invest in “hot” stock
RA4 I sell stock when prices falling
RA5 I like to use derivative for hedging
ATB1 Derivative helps me better control risk when trading stocks
ATB2 Derivative is more beneficial than the cost that I have to spend ATB3 I feel derivative brings a lot of benefits
ATB4 I am more confident when using derivative in stock trading
SN1 Friends, colleagues advised me to use derivative
SN2 Relatives advised me to use derivative in stock trading
SN3 The broker recommends me to use the derivation in stock trading
SN4 The information available is advisable to use derivative in stock trading
PBC1 I can use derivative as soon as I need it PBC2 I can manually use derivative
PBC3 I have no problem using derivative PBC4 I can easily use derivative with the help of broker
BEHAVIORAL INTENTION TO USE (BI)
BI1 I intend to use derivative in stock trading
BI2 I intend to introduce my friends to use derivative in stock trading BI3 I will introduce family members to use derivative in stock trading
Data collection
Prior to executing a large sample survey, a pilot test was carried out to evaluate the effectiveness of the questionnaire (Iarossi, 2006) According to Aaker, Kumar, and Day (2006), a sample size of 15 to 25 is recommended for pilot testing Consequently, this research involved a pilot test with 30 participants.
According to Gorsuch (1983) and Hair et al (2010), the ratio between subject and variable must be at least 5:1 It means five respondents per variable
However, the most acceptable sample size calculation is 10:1 ratio (10 samples for one variable) Therefore, the minimum sample size is 165 and desired sample size is
330 On the other hand, according to Comfrey & Lee (1992), the number of samples ranked from very poor to very good as follows:
Table 2 Sample size Criteria (Comfrey & Lee, 1992)
0.5) and the Bartlett test was significant (sig