Luận văn thạc sĩ UEH determinants of behavior intention to use derivative securities a study on

UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

------------------------------

Trang Nguyen Thanh Phuong

DETERMINANTS OF BEHAVIOR

INTENTION TO USE DERIVATIVE

SECURITIES. A STUDY ON

INDIVIDUAL INVESTOR'S

BEHAVIORS IN STOCK MARKET

OF VIETNAM

MASTER OF BUSINESS (honours)

Ho Chi Minh City – Year 2018

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UNIVERSITY OF ECONOMICS HO CHI MINH CITY

International School of Business

------------------------------

Trang Nguyen Thanh Phuong

DETERMINANTS OF BEHAVIOR

INTENTION TO USE DERIVATIVE

SECURITIES. A STUDY ON

INDIVIDUAL INVESTOR'S

BEHAVIORS IN STOCK MARKET

OF VIETNAM

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: DR. Trần Phương Thảo

Ho Chi Minh City – Year 2018

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Acknowledgement

I would like to express my sincere thankfulness to my supervisor, Dr. Tran

Phuong Thao, who made me believe in myself and gave me the possibility to

complete the thesis. Her guidance helped me in all the time of research and writing

this thesis. I am sure that this thesis would not have been possible without her

support.

I would like to express my gratitude to all staffs in ISB who supported

necessary materials and helped submit my papers.

My sincere thanks also go to friends and colleagues who participated in the

pilot study that led to the development of the final survey questionnaire and their

support over the time when I was busy to conduct the research.

Especially, I would like to give my special thanks my family for supporting

me spiritually throughout my life.

Trang Nguyen Thanh Phuong

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Abstract

This study investigates the determinants of behavior intention to use

derivative securities on individual investor ‘s behaviors in stock markets of

Vietnam. Those determinants include attitude towards behavior, subjective norm,

perceived behavioral control. It also examines the effect of overconfidence,

excessive optimism, herd behavior, risk aversion toward attitude towards behavior.

An empirical test was conducted with a sample of 317 individual investors by

means of structural equation modeling. The results show that perceived behavior

control has the strongest impact on the three main factors affecting behavior

intention to use derivative securities with a coefficient of 0.426. The other two

factors, including attitude towards behavior, subjective norm, have a direct impact

on behavior intention to use derivative securities with coefficients of 0.356 and

0.216 respectively. On the other hand, overconfidence, excessive optimism, herd

behavior and risk aversion have direct effect on attitude towards behavior.

However, herd behavior and aversion effect attitude towards behavior with positive

coefficient while overconfidence, excessive optimism affect with negative

coefficient. Finally, age and education play an important role in behavior intention

to use securities derivatives while there is no difference between men and women

who intend to use derivative securities.

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Table of Contents

Acknowledgement............................................................................................................. 1

Abstract............................................................................................................................. 2

List of figures.................................................................................................................... 5

List of tables...................................................................................................................... 6

List of abbreviations.......................................................................................................... 7

1. Introduction................................................................................................................ 8

2. Theoretical background and hypotheses....................................................................... 13

2.1. Foundational Theory............................................................................................. 13

2.2. Research model and hypotheses............................................................................ 16

2.2.1. Attitude towards behavior (ATB) .................................................................... 17

2.2.2. Subjective Norm (SN) ..................................................................................... 21

2.2.3 Perceived behavioral control (PBC) ................................................................ 23

2.2.4. Demographic factors.......................................................................................... 24

3. Research methodology ................................................................................................ 26

3.1. Research approach ................................................................................................ 26

3.2. Questionnaire design............................................................................................. 28

3.3. Data collection ...................................................................................................... 32

3.4. Research Method .................................................................................................. 33

3.4.1. Pilot test ......................................................................................................... 33

3.4.2 Main survey test............................................................................................... 34

4. Data analysis and results.............................................................................................. 37

4.1. Descriptive statistics ............................................................................................. 37

4.2. Reliability Analysis............................................................................................... 38

4.3. Exploratory Factor Analysis (EFA) ....................................................................... 40

4.4. Confirmatory Factor Analysis (CFA) .................................................................... 43

4.4.1. Composite Reliability...................................................................................... 43

4.4.2. Convergent Validity of all variables........................................................... 45

4.4.3. Discriminant Validity of all variables......................................................... 46

4.3. Structural Equation Modeling (SEM).................................................................... 48

4.4. Indirect Effects of Behavior intention to use.......................................................... 49

4.5. Independent Sample T-test and Oneway Anova..................................................... 50

4.5.1 Gender ............................................................................................................ 50

4.5.2 Education ........................................................................................................ 51

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4.5.3 Age.................................................................................................................. 53

4.6. Hypothesis testing results...................................................................................... 54

5. Discussion & conclusion ............................................................................................. 55

5.1. Discussion............................................................................................................. 55

5.2. Implications for managers..................................................................................... 57

5.3. Conclusion............................................................................................................ 58

5.4. Limitations and directions for future research....................................................... 59

REFERENCES................................................................................................................ 60

APPENDICES ................................................................................................................ 63

Questionnaire (English version)................................................................................... 63

Questionnaire (Vietnamese)......................................................................................... 67

A. Frequencies.......................................................................................................... 71

C. Reliability ............................................................................................................. 73

D. Factor Analysis..................................................................................................... 81

E. Confirmatory Factor Analysis............................................................................... 87

F. Structural Equation Modeling ............................................................................... 93

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List of figures

Figure 1. The theory of planned behavior – (Ajzen, 1991)............................................... 14

Figure 2. Research model ................................................................................................ 17

Figure 3. Main steps of research process.......................................................................... 28

Figure 4. First Measurement Standardized Modelling...................................................... 47

Figure 5. Structural Equation Model................................................................................ 48

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List of tables

Table 1. Measurement scale............................................................................................. 30

Table 2. Sample size Criteria (Comfrey & Lee, 1992) ..................................................... 32

Table 3. Criteria for Measurement Model........................................................................ 35

Table 4. Descriptive statistics.......................................................................................... 37

Table 5. Remiability Test Results.................................................................................... 38

Table 6. KMO and Bartlett's Test .................................................................................... 40

Table 7. Total Variance Explained................................................................................... 41

Table 8. Pattern Matrix.................................................................................................... 42

Table 9. Value of Composite Reliability.......................................................................... 45

Table 10. Value of Average Variance Extracted .............................................................. 45

Table 11. Discriminant Caculating Result........................................................................ 46

Table 12. Square root of AVE results .............................................................................. 46

Table 13. Regression Weights of Model .......................................................................... 49

Table 14. Indirect effects on Behavior intention to use .................................................... 50

Table 15. Independent Samples Test................................................................................ 50

Table 16. Test of Homogeneity of Variances................................................................... 51

Table 17. Anova tesing result .......................................................................................... 52

Table 18. Descriptives Statistics...................................................................................... 52

Table 19. Test of Homogeneity of Variances................................................................... 53

Table 20. Anova tesing result .......................................................................................... 53

Table 21. Descriptives Statistics...................................................................................... 53

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List of abbreviations

No. Abbreviation Meaning

1 AVE Average Variance Extracted

ATB Attitude Towards Behavior

2 CFA Confirmatory factor analysis

3 CR Composite Reliability

5 EFA Exploratory factor analysis

6 HOSE Ho Chi Minh City Stock Exchange

7 HNX Hanoi Stock Exchange

12 TRA Theory of Reason Action

13 TBC Perceived Behavioral Control

14 TPB Theory of Planned Behavior

SN Subjective Norm

15 SEM Structural Equation Modeling

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1. Introduction

Derivatives are a valuable financial instrument that depends on the price of

the underlying asset. Basically, derivatives can be understood as a type of contract

for a future but predefined transaction. Derivative instruments are conduct as a tool

used to manage and control risk. Specifically, derivative products are used to

prevent risk when asset values fluctuate. In addition, derivatives are considered as

hedging instruments against volatility of commodity prices. In the derivatives

market, there are two main markets: the financial derivative market and commodity

derivatives market. In this study, the author will focus on the financial derivatives

market on the stock market, exactly the Vietnam stock market.

To date, Vietnam stock market has been established for quite a long time, but

just over 11 years the stock market of Vietnam has a significant development; Two

stock exchanges have been established, namely the Ho Chi Minh City Stock

Exchange (HOSE) and the Hanoi Stock Exchange (HNX), a stock exchange

depository center has been established, nearly 89 securities companies are operating

and more than 700 companies have listed their shares and fund certificates on two

Vietnamese stock exchanges. By 2013, at the Ho Chi Minh City Stock Exchange,

the stock market capitalization has reached over $ 32 billion, equivalent to 25

percent of GDP in 2013, the number of accounts of investors reached over 1.3

million trading accounts, of which foreign investors had about 16,000 accounts,

compared to the end of 2007, the total number of securities trading accounts has

increased by more than 3.5 times and the number of accounts of foreign investors

has nearly doubled, proving that the demand of securities investors has increased

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