Investor Trust and Stock Market Participation: Evidence from BIST
Keywords:
Trust, Trustworthiness, Borsa Istanbul, Individual Investor, Structural Equation Model-SEM, Smart-PLS.
Abstract
Developed financial markets are a necessary element for a healthy economy. A developed financial market also requires a well-functioning technical and legal infrastructure, financial institutions, institutional investors, and a sufficient number of individual investors prone to trading in the markets. More investors with more funds in exchanges, one of the essential elements of financial markets, contribute positively to the stock market and markets. The purpose of this study is to determine the overall level of trust of individual investors in the companies they invest in in the Stock Exchange Istanbul (BIST), to determine the level of relationship between the antecedents of the concept of trust and trustworthiness, cognitive and affective trust. To determine the level of trust that investors invest in stocks of the companies listed in Borsa İstanbul, a survey was conducted with 645 investors in Turkey using the convenience sampling method. The data obtained were analyzed using the structural equation model (SEM) in the Smart-PLS program. According to the findings, it is understood that the overall level of confidence of investors is low. The antecedent trust that has the most significant impact on listed companies' trustworthiness is concern and benevolence (0.460). There is a strong link between trustworthiness and cognitive and affective trust. The findings suggest that policymakers need to create and implement effective policies to increase investor trust.
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Calderón, C., Chong, A., & Galindo, A. (2002). Development and Efficiency of the Financial Sector and Links with Trust: Cross‐Country Evidence. Economic Development and Cultural Change, 51(1), 189-204. doi:10.1086/344547.
Camilleri S., J. Grima L., & Grima,S. (2018) "The effect of dividend policy on share price volatility: an analysis of Mediterranean banks’ stocks", Managerial Finance, https://doi.org/10.1108/ MF-11-2017-0451, https://doi.org/10.1108/MF-11-2017-0451
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Civelek, M.E. (2018). Yapısal Eşitlik Modellemesi Metodolojisi. Beta Basım Yayın Dağıtım, I. Baskı. İstanbul.
Çakır, F.S. (2019). Kısmi En Küçük Kareler Yapısal Eşitlik Modellemesi (PLS-SEM) ve Bir Uygulama, Sosyal Araştırmalar ve Davranış Bilimleri Dergisi Cilt 5, Sayı 9, s. 111-128.
Fornell, C., & Larcker, D. F. (1981). Structural equation models with unobservable variables and measurement error: Algebra and statistics.
Georgarakos, D., & Pasini, G. (2011). Trust, sociability, and stock market participation. Review of Finance, 15(4), 693-725, https://doi.org/10.1093/rof/rfr028.
Guiso, L., Sapienza, P., & Zingales, L. (2008). Trusting the stock market. the Journal of Finance, 63(6), 2557-2600, https://doi.org/10.1111/j.1540-6261.2008.01408.x.
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Hair, J.F., Hult, G.T.M., Ringle, C.M. and Sarstedt, M. (2014). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), Sage Publication, Los Angeles. Sage.
Hair, J., Anderson, R., Tatham, R., & Black, W. (1998). Multivariate Data Analysis (5th ed.). Englewood Cliffs: Prentice Hall.
Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., and Tatham, R. I. (2010). Multivariate Data Analysis. 7th Edition. Pearson Prentice Hall, New Jersey.
Hair J.,F, Tomas M.,H, Ringle M., C (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), Second Edition, SAGE Publications, ISBN 978-1-4522-1744-4.
Kara, F. Z., Sarıkaya, M., & Temizel, F. (2009). Yatırımcı İlişkileri Yönetiminde Güven Ve Ekonomiye Etkisi. Afyon Kocatepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 11(1), 279-307.
Kline, R.B. (2011) Principles and Practice of Structural Equation Modeling. Guilford Press, New York, ISBN 978-1-4625-2335-1.
Levine, R., (1997). Financial Development and Economic Growth: Views and Agenda‛ Journal of Economic Literature, 35, 687-726.
Mayer, C. (2008). Trust in financial markets. European Financial Management, 14(4), 617-632, https://doi.org/10.1111/j.1468-036X.2008.00454.x.
Maslow, A. H. (1943). Preface to motivation theory. Psychosomatic medicine, 5(1), 85–92, https://doi.org/10.1097/00006842-194301000-00012.
McAllister, D. (1995). Affect and cognition-based trust as foundations for interpersonal cooperation in organisations. Academy of Management Journal, 38(1), 24–59.
Ng, A., Ibrahim, M. H., & Mirakhor, A. (2016). Does trust contribute to stock market development?. Economic Modelling, 52, 239-250, https://doi.org/10.1016/j.econmod.2014.10.056.
Noja, G. G., & Cristea, M. (2017). Working conditions as key drivers of economic growth: Empirical evidence for Europe. Economic and Social Development: Book of Proceedings, 59-71.
Sekhon, H., Ennew, C., Kharouf, H., & Devlin, J. (2014). Trustworthiness and trust: Influences and implications. Journal of Marketing Management, 30(3-4), 409-430, https://doi.org/10.1080/0267257X.2013.842609.
Sitkin, S., & Roth, N. (1993). Explaining the limited effectiveness of legalistic for trust/distrust. Organisation Science, 4(3), 367–392. doi:10.1287/orsc.4.3.367.
Tufan, E. (2020), Behavior of Investor and Behavioral Finance: Some Cognitive Biases and Heuristics, in Modern Portfolio Management: Methods, Approaches and Applications (in Turkish), Ed.Ercan ÖZEN, Ekin Publishing, Bursa. ISBN: 978-625-7210-22-5.
Temizel, F., & Coşkun, İ. O. (2010). Finansal Piyasalar İle Etkin Bir İletişim ve Geliştirilmiş Şeffaflık Aracı Olarak Yatırımcı İlişkileri. Afyon Kocatepe Üniversitesi İktisadi ve İdari Bilimler Fakültesi Dergisi, 12(2), 81-102.
Vurur, S., E. Özen, 2013, Türkiye’de Mevduat Banka Kredisi ve Ekonomik Büyüme İlişkisinin İncelenmesi, Uşak Üniversitesi Sosyal Bilimler Dergisi, 6(3), 119-133.
Williams, M. (2001). In whom we trust: Group membership as an affective context for trust development. The Academy of Management Review, 26(3), 377–396. doi:10.2307/259183
Whitener, E., Brodt, S., Korsgaard, A., & Werner, J. (1998). Managers as initiators of trust: An exchange relationship framework for understanding managerial trustworthy behaviour. Academy of Management Review, 23(3), 513–530. doi:10.5465/AMR.1998.926624.
Yılmaz, V., Can, Y., Aras, N. (2019). Investigation of Attitude about Nuclear and Renewable Energy by Using Partial Least Squares Structural Equation Modeling. Alphanumeric journal The Journal of Operations Research, Statistics, Econometrics and Management Information Systems, 7(1), 87-102, DOI: 10.17093/alphanumeric.460563.
Yeşildağ, E., & Kaderli, Y. (2013). Türkiye’de Seans Salonuna Gelen Yatırımcıların Aracı Kurum Seçimine Etki Eden Unsurlar: Bir Faktör Analizi Uygulaması. Muhasebe ve Finansman Dergisi, (59), 113-134.
Yeşildağ, E., & Özen, E. (2015). Uşak ilindeki hisse senedi yatırımcılarının profili ve yatırım kararlarını etkileyen demografik ve sosyo-ekonomik faktörlerin analizi. (The Profile of Stock Investors in Uşak and Analysis of Demographic and SocioEconomic Factors Affecting Investment Decisions) Journal of Accounting, Finance and Auditing Studies, 1(2), 78-102.
Turkish Statistical Institute (TurkStat), 2020, https://data.tuik.gov.tr/Bulten/Index?p=Adrese-Dayal%C4%B1-N%C3%BCfus-Kay%C4%B1t-Sistemi-Sonu%C3%A7lar%C4%B1-2020-37210&dil=1, (Accessed on 03.11.2020).
Turkish Capital Markets Association, 2020, https://www.tspb.org.tr/tr/veriler/, (Accessed on 03.11.2020).
http://www.worldvaluessurvey.org/wvs.jsp. (Accessed on 10.03.2020)
Published
2022-04-08
How to Cite
Özen, E. (2022). Investor Trust and Stock Market Participation: Evidence from BIST. Timisoara Journal of Economics and Business, 14(1), 1-22. Retrieved from https://www.tjeb.ro/index.php/tjeb/article/view/346
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Copyright (c) 2021 Ercan Özen
Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License.
(CC BY-NC-ND 3.0) (Since 2014)
Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 3.0 License. (CC BY-NC-ND 3.0) (Since 2014)
