Factors influencing the choice of securitiescompaniesby individual investors in vietnam

1 CHAPTER 1: INTRODUCTION 1.1 Research Purpose To survive in the fierce competition as well as to achieve the business objectives, securities companies have to find out the measures to attract customers to open accounts and use their own services, take a good care of and retain existing customers The study of choice behaviors for securities companies, including the choice for account opening and the choice for service usage at a securities company, is necessary to help both investors and brokers to easily achieve their goals on the Vietnam Stock Market 1.2 Research Objectives Recognizing the factors that influence the choice behavior of securities companies by individual investors on the Vietnam stock market Determining the influence level of factors to the individual investors’ behaviors of choosing securities company on the Vietnam stock market Proposing a number of solutions in order that securities companies can serve investors better as well as to retain and attract customers for benefits of the investors and securities company Subject and scope of the research Subject: factors that influence the individual investors’ choice behaviors for securities companies on Vietnam stock market Object: individual securities investor using services of securities companies on Vietnam stock market Researching time: sociological investigation activities and indepth interviews are conducted from the beginning of August 1.4 Overview of research methodology - Data collection method Secondary data collection The study synthetized and analyzed secondary information from home and international available documents, articles Secondary data collection (1) Qualitative research The study was conducted by interviewing high-ranking leaders in some securities companies in Hanoi (2) Quantitative research The study used control chart to collect information and convenience sampling method to select the investigable sample: (i) directly giving control charts to 500 investors using services of securities companies; (ii) conducting a survey through Internet - 1.3 Researching scope: limitation in the Vietnamese private investors’ choice behavior for securities companies on Vietnam stock market, including both HSX and HNX Researching space: securities companies operating are based in Hanoi and/or Ho Chi Minh City 1.5 Data processing method After the survey, the data will be processed by statistical analysis software SPSS version 20.0 Cronbach’s Alpha; Exploratory Factor Analysis (EFA); T-Test and ANOVA will be used to analyze the collected data New contributions of the study New contributions in terms of academic and theoretical fields The research has launched a model of influencing factors on the choice of securities companies by individual investors on the Vietnam Stock Thesis is to build measure system of factors influencing choice behavior of securities companies of individual investors in line with the context of Vietnam stock market The measure system consist of 32 scales, among that, 05 scales are self-constructed based on the practice of Vietnam stock company and othersare consulted from abroad scholar’s researches, translated into Vietnamese and adjusted its words yet still remaining its own content to be consistent with the context and practical study of the thesis From the result of research and under the marketing perspective, the study proposes solutions to help securities firms to attract and retain customers for the benefit of all stakeholders in line with realities of securities companies in Vietnam New contribution in terms of applications/practices In the thesis, individual investors were directly surveyed, inspected through the analysis, statistics process and then arrange the factors that influence the choice behavior of private investors on Vietnam stock market The results showed that there are factors that influence the choice behavior of private investors, ranked in the order of the highest to the lowest importance: Service Quality; Cost; Types of Services, Company Reputation; Staff; Convenient Location; Company Appearance; Influence of Relatives Through the direct customer surveys and data analysis and statistics techniques, the study draws some generalized characteristics of individual investors in Vietnam: The vast majority of individual investors Vietnam is young; Most of them have a university degree and post graduate; Most individual investors have a stable job and stock investment is just one channel investments; Many of them have incomes from 10-30 million; The great majority of transactions simultaneously in both HSX and HNX; Most have five years of experience or more; Many investors open multiple accounts with different securities company, but transact in only one account; CHAPTER 2: LITERATURE REVIEW ONTHE SECURITIES INVESTORS’CHOICE BEHAVIOR FORSECURITIES COMPANY Transaction Frequency of individual investors are quite often Besides the results of investor direct surveys, the study also conducted the in-depth interview with some securities company leaders to find and bring out reasons which cause influencing factors on the choice behavior of private investors on Vietnam stock market 2.1 Literature review on customers’ choice behavior 2.1.1 Customer’s buying and choice behavior Blench & Blench (1998) defined customer’s buying behavior as: “human’s process and activity in searching, choosing, buying, using, evaluating and dealing goods, services in order to satisfy their needs and wants” Furthermore, buying behavior is also mentioned in detail through Salomon et al’s researches (1995); Gabbot and Hogg (1998); Schiffman and Kanuk (2000); Kotler and Keller (2011) and Stallworth (2008) Concept of the first choice is mentioned a lot in research related to science of psychology Gradually, this term is popularized in marketing field to explain decisive model of consumers The concept and importance of the choice are mentioned in their own researches by Hansen (1976); Kotler (2000) and Sayani & Miniaoui (2013) 2.1.2 Behavior of customers’ choice for organizations providing services in the field of finance and banking Aregbeyen (2011) described the behavior of client’s choice in the finance and banking field based on the theory of reasonable choice and competition theory 2.2 Securities company and investment bank Investment bank is an intermediary in capital market It connects companies, organizations which have strong potential in finance (investor) to ones in need of it so that they can business and manufacture, and then increase GDP (Pratab 2008) In different economies, the term “investment bank” is known as different names In Asian countries like China, Thailand and Vietnam…, investment bank sare known as “securities companies” Investment banks can function independently or link their works to activities of commercial banks, insurance companies under the name of general banks At the present, most of banks act as general bank model (Mac Quang Huy,2009) typically such as HSBC, Deutsche Bank, Citigroup, Creditgroup, Credit Suisse, JP Morgan Chase, Bank of America, Nomura, Golman Sachs, Morgan Stanley… (Liaw 2012) In fact, securities company and investment bank are two different names for the same type of intermediate model in stock market, as Mac Quang Huy asserts that “investment bank” and “securities company” can be used to replace for each other without changing contextual meaning From this fact, the study collected and had references to the worldwide researches related the client’s choice behavior at banks including investment bank, a highly-developed form of securities companies 2.3 Literature Review 2.3.1 Foreign studies on the choice behavior of the banking and financial services organizations Studies on influencing factors to individual customer’s choice behavior of organizations that provides banking and finance services are published by experts in the past few years Many factors were given as the following summaries: 1- Factors related to company appearance ( bank) are mentioned in the following researches: Laroche et al (1986); Driscoll (1999); Gerrard & Cunningham (2001); Yavas et al.; Safakli (2007); Rehman Ahmed (2008); Rehman Ahmed (2008); Chigamba & Fatoki (2011); Katircioglu et al (2011); Hedayatnia & Eshghi (2011); Mokhlis et al (2011); Siddique (2012); Sarwar Mubeen (2012); Okpara Onuoha (2013) 2- Factors related to convenient location are mentioned in the following researches: Kaufman (1967); Mason & Mayer (1974); Anderson et al (1976); Gray (1977); Riggal (1980); Lewis (1982); Laroche et al (1986); Javalgi et al (1989); Schram (1991); Kaynak Kucukemiroglu (1992); Martenson (1993); Boyd et al (1994); Yue Tom (1995); Thwaites Vere (1995); Mylonakis et al (1998); Kennington et al (1999); Driscoll (1999); Owusu-Frimpong (1999); Tạ Har (2000); Almossawi (2001); Gerrard & Cunningham (2001); Che Wel & Nor (2003); Cicic et al (2004); Pass (2006); Safakli (2007);Blankson et al (2007); Rehman Ahmed (2008);Blankson et al (2009); Jahiruddin & Haque (2009); Hinson et al (2009); Rao Sharma (2010); Maiyaki (2011); Katircioglu et al (2011);Hedayatnia & Eshghi (2011); Chigamba & Fatoki (2011); Mokhlis et al (2011); Siddique (2012); Okpara Onuoha (2013) 3- Factor related to company reputation (bank) are mentioned in the following researches: Anderson et al (1976); Laroche et al (1986); Javalgi et al (1989); Khazeh Decker (1993); Boyd et al (1994); Yue Tom (1995); Thwaites Vere (1995); Kennington et al (1999); Almossawi (2001); Tank & Tyler (2005); Katircioglu et al (2011); Maiyaki (2011); Hedayatnia & Eshghi (2011); Chigamba & Fatoki (2011); Mokhlis et al (2011); Siddique (2012); Okpara Onuoha (2013) 4- Factor related to Cost and Price are mentioned in the following researches: Anderson et al (1976); Riggal (1980); Gupta & Torkzadeh (1988); Javalgi et al (1989); Khazeh Decker (1993); Boyd et al (1994); Yue Tom (1995); Holstius & Kaynak (1995); Thwaites Vere (1995); Zineldin (1996); Tootelian & Gaedeke (1996); Kennington et al (1999); Driscoll (1999); Tạ Har (2000); Almossawi (2001); Kaynak Harcar (2004); Cicic et al (2004); Tank & Tyler (2005); Pass (2006); Safakli (2007); Blankson et al (2007); Mokhlis et al (2008); Blankson et al (2009); Jahiruddin & Haque (2009);Katircioglu et al (2011); Hedayatnia & Eshghi (2011); Maiyaki (2011); Mokhlis et al (2011); Chigamba & Fatoki (2011); Siddique (2012); Okpara Onuoha (2013) 5- Factor related to Staff are mentioned in the following researches: Mason & Mayer (1974); Anderson et al (1976); Tan & Chua (1986); Laroche et al (1986); Holstius & Kaynak (1995); Thwaites et al (1997); Owusu-Frimpong (1999); Gerrard & Cunningham (2001); Almossawi (2001); Katircioglu et al (2011); Hedayatnia & Eshghi (2011); Mokhlis et al (2011); Chigamba & Fatoki (2011); Sarwar Mubeen (2012); Siddique (2012); Okpara Onuoha (2013) 6- Factors related to recommendation and effect from third party are mentioned in the following researches: Mason & Mayer (1974); Anderson et al (1976); Riggal (1980); Lewis (1982); Tan & Chua (1986); Schram (1991); Zineldin (1996); Gerrard & Cunningham (2001); Tank & Tyler (2005); Safakli (2007); Blankson et al (2007); Rehman Ahmed (2008);Blankson et al (2009); Jahiruddin & Haque (2009); Katircioglu et al (2011); Hedayatnia & Eshghi (2011); Chigamba & Fatoki (2011); Mokhlis et al (2011); Sarwar Mubeen (2012); Okpara Onuoha (2013) 7- Factors related to service quality are mentioned in the following researches: Kaufman (1967); Laroche et al (1986); Kaynak Kucukemiroglu (1992); Boyd et al (1994); Yue Tom (1995);Holstius & Kaynak (1995); Poh (1996); Ma et al (1996); Thwaites et al (1997); Mylonakis et al (1998); Kennington et al (1999); Driscoll (1999); Gerrard & Cunningham (2001); Che Wel & Nor (2003); Cicic et al (2004); Tank & Tyler (2005); Safakli (2007); Rehman Ahmed (2008); Katircioglu et al (2011); Hedayatnia & Eshghi (2011); Maiyaki (2011); Chigamba & Fatoki (2011); Yavas et al.; Siddique (2012); Okpara Onuoha (2013) 8- Factors related to kind of service are mentioned in the following researches: Driscoll (1999); Rao Sharma (2010); Katircioglu et al (2011); Aregbeyen (2011); Hedayatnia & Eshghi (2011); Mokhlis et al (2011); Chigamba & Fatoki (2011); Yavas et al.; Siddique (2012); Okpara Onuoha (2013) 9- Factors related to security are mentioned in the following researches: Boyd et al (1994); Zineldin (1996); Katircioglu et al (2011) 10- Factors related to time of operation are mentioned in the following researches: Laroche et al.(1986); Omar & Orakwue (2006) 9 11- Factors related to feeling of safety are mentioned in the following researches: Javalgi et al (1989); Holstius & Kaynak (1995) 12- Factors related to marketing are mentioned in the following researches: Sarwar & Mubeen (2012); Okpara Onuoha (2013) 2.2.2 Foreign studies on the individual investor’s choice behavior at securities companies Foreign studies about individual investor’s behavior related to securities companies are commonly researched on investor’s loyalty to securities company (Opas & Pacapol, 2007) or satisfaction with services of securities companies 2.2.3 Domestic studies Pham Thi Tam and Pham Ngoc Thuy (2010) indicates elements influencing customer’s trend of choosing bank: “appearance”; “convenient time”; “convenient location”; “influence of relatives”; “brand awareness” and “attitudes toward promotion” 2.3 Context of research on behavior of securities company choices - actual development situation in stock trading in Vietnam 2.3.1 Overview of Vietnam stock market Vietnam stock market had the first transaction on July 28th, 2000 with securities companies and stock codes Vietnam stock market boomed, reaching a record 1,170,67 points on March 12,2007 with VN-Index HASTC also peaked with 459,36 points on March 19th, 2007 However, after that, Vietnam stock market was into recession period with constant decrease of index, share price and many shares were traded with lower price than its par value VN-Index bottomed with 235,5 points on February 24th, 2009 and HNX-Index with 50,66 10 points on November 6th,2012 Stock market was recovered in 2009 and 2014 but it was just the recovery in recession 2.3.2 Overview of securities companies and individual investors 2.3.2.1- Number of securities companies At the starting point Vietnam’s stock market went into operation with only securities companies The number of securities companies was increased by after the first year The number increased rapidly and reached the top in 2011 with 106 securities companies However, due to the recession along with the urgent request to restructuring of securities companies from State Securities Commission, the number of securities companies was down to 104 at the present, among that there are 86 companies which operates normally 2.3.2.2- Individual investors- the customer of securities companies Individual investors play an important role to securities companies - First: Individual investor contributes to set up position of securities companies - Second: Individual investor pays salary for securities companies - Third: Individual investor is effective competitive arm for securities companies In 2000, there were less than 3000 securities transaction accounts in Vietnam stock market After 15 years, there was up of 1,54 million securities transaction accounts, among that the number of domestic individual investors’ accounts are 1,497,544 on July 31st,2015 2.3.2.3 Securities service for individual investor Individual investor uses services such as securities investment consultancy, securities broker, securities depository, management of securities catalog, value-added services as security deposit, T+2 11 12 2.4 Model, terms and question of research 2.4.1 Proposed research model Due to the characteristics of investment bank model, investment bank exists in independent investment banks or general banks in the developing countries like Europe, America… In Vietnam, investment bank model exist under the name of securities company; therefore, the study acquired, analyzed, inquired, inherited, developed and summarized the home and worldwide researching models and methods on influencing factors to the individual customer’s choice behavior, specially researches of Almossawi (2001); Gerrard and Cunningham (2001); Yavas et al.; Maiyaki (2011); Salid et al (2011); Hedayatnia & Eshghi (2011); Chigamba & Fatoki (2011); Mokhlis et al ( 2011); Siddique (2012); Okpara Onuoha (2013) in order to build, consider and evaluate influencing factors to individual customer’s choice behavior of securities company on Vietnam stock market 2.4.2 Related terms 2.4.2.1 Company appearance Company appearance relates to factors such as external architecture, decoration and internal space of the company 2.4.2.2 Convenient location Convenient location is close to company location compared with house and working place location of the customers and/or the others matters about location making customers feel most comfortable, pleasant and convenient 2.4.2.3Company reputation Company reputation is described as invisible asset that can influence effect and existence of the company 2.4.2.4 Cost Cost is what you give up or sacrifice to get some goods or certain services (Zeithaml, 1998) 2.4.2.5 Staff For companies providing services in particular and securities companies in general, employee are an intangible asset of the company 2.4.2.6 Influence of relatives Personal behavior is often influenced by third parties such as friends, colleagues, parents, relatives 2.4.2.7 Quality of Service Quality of service is defined as the overall feeling of the Company appearance Convenient location Company reputation Cost Choice behavior of Securities Company Staff Influence of relatives Service Quality Types of services Demographic Factors(Moderator variables) Figure 2.1: The Proposed Research Model customers about the advantages and disadvantages of the organization and services provided by that organization 2.4.2.8 Type of Services 13 14 In the fierce competitive environment, the improvement, innovation and provide of diversified types of products is essential to the success and growth of business (Strieter et al., 1999) Main survey was conducted through questionnaire with a minimum sample size of 500 sample elements for individual investors who are conducting transactions in securities companies and through social networks Facebook at the link: http://questionpro.com/t/ALCxyZRbMs Qualitative research An in-depth interview is carried out with leaders of securities companies in Hanoi 2.4.3 Researching questions (1) What are the influencing factors on the choice for Securities Company of individual investors on the Vietnam stock market? (2) How the factors influence to the choice for Securities Company of individual investors on the Vietnam stock market? (3) If the different demographic groups have different evaluation on the importance of these influencing factors on the choice for securities company of individual investors on the Vietnam stock market or not? (4) What are the solutions for Securities Company to serve investors better, and then they can retain customers or attract target customers for the benefit of both investors and brokers? CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research process Phase 1: Initial research On the basis of the literature review, the study has evaluated and summarized the results of previous researches to build researching theoretical model Besides that, the study conducted the deep interview with professors, associate professors and leaders of securities companies to perfect researching models and scales Phase 2: Pilot test There are 30 individual investors chosen to the survey forms by convenience sampling model Phase 3: Main test Quantitative research 3.2 Data collection method 3.2.1 Secondary data collection method Data source is researches on choice behavior of customers in the banking and financial sector and reports, summaries of the State Securities Commission on the electronic information sites on the internet 3.2.2 Primary data collection method 3.2.2.1Qualitative research Qualitative research is used in initial research period (period 1) and main test period (period 3) during researching process 3.2.2.1 Quantitative research A- Survey form design Survey form for quantitative research of the project consists of parts: Part 1: consists of survey questions about actual situation of investor’s securities company choice Part 2: consists of 35 questions measuring the importance of 35 issues of the factors affecting choice behavior in the company's securities Vietnamese individual investors by points Likert scale ranked level = very unimportant to level = very important 15 Part 3: consists of questions related to demography of people surveyed such as: Gender, Age, Education, Job, Income B- Sampling method The study uses convenience sampling method to carry out the research Sampling space is at 18 securities companies in Hanoi and 10 othersin Ho Chi Minh City 3.3 Data analysis technique The study uses SPSS software 20.0 version for analysis and testing After that, data will be processed according to the following steps: - Step 1: cleaning, coding and data entry - Step 2: Exploratory Factor Analysis - Step 3: Cronbach’s Alpha - Step 4: Testing the level of importance of the factors affecting the choice of securities companies through descriptive statistical techniques to calculate the average value, T-test analysis and analysis of variance ANOVA CHAPTER 4: RESEARCHING RESULT 4.1 Descriptive statistics of Sample After investigating, conducting tests and eliminating errors survey forms, the study collected 379 completed direct answers and 137 valid online surveys Finally, 516 valid questionnaires were processed for statistical analysis 4.1.1 Demographic characteristics of Sample For gender: there are 293 male investors accounted for 56,8% and 223 female investors with 43,2% For age: Most of those are aged from 25 to 31, with 221 investors in this age group and accounted for 42,8% 16 For education: Majority of respondents hold university degree or above and accounted for 95% of investors in total For occupation: Almost all investors are officers and employees in company or enterprises, accounted for 70% with 314 investors For income: 274 respondents with equivalent rate of 53.1% have income between 10 to 30 million VNĐ per month 4.1.2 Actual rates of individual investor using securities company service There are 90,3% of individual investors participating in the survey did investment in both main transaction office Most of them invested on Vietnam stock market up to 2010 (322 investors with equivalently 42,4%) There are 232 investor opening the only account in a securities company compared with 280 investors opening in from to securities companies However, there are 98 investors with equivalent rate of 19% accounts opening in many securities companies, the only transaction was in one securities companies There are 349 individual investors with 67,6% trading on stock market regularly Most of them are retail investors with the transaction under 100 million dong/session 4.2 Factors influencing the choice of securities companies by individual investors in Vietnam stock market 4.2.1 Exploratory Factor Analysis (EFA) The result shows KMO coefficient factor equal 0,870 satisfied KMO condition that KMO is bigger than 0,5 Barlet test gives result that p=0,000