Impact of stockbrokers’ services on the trust and confidence of retail equity investors: an ordinal approach

Abstract

Purpose The purpose of this study was to assess equity investors satisfaction with stockbroker services. Four components emerged from a factor analysis of 14 variables of retail equity investors’ satisfaction with stockbroker services. According to the findings, these elements have a substantial impact on investors’ trust and confidence in stockbrokers. Design/methodology/approach By physically visiting stockbrokers’ offices in Punjab, including Amritsar, Jalandhar, Ludhiana and Mohali, 1,000 questionnaires were distributed to retail equities investors. Stockbrokers were chosen using a simple random selection process due to their large number. Questionnaires were filled out by personally visiting stockbrokers’ offices and handing over surveys, instructing them to fill them out with information from their clients and personally visiting stockbrokers’ offices and instructing their clients to complete the questionnaires. The respondents completed 373 surveys. A total of 45 surveys were determined to be incomplete and were removed from the study. The remaining 328 surveys were used to conduct the analysis. The study uses ordinal regression to assess investors’ trust and confidence in stockbrokers’ services. Findings The findings of the study highlighted the importance of variables evaluated by respondents when seeking stockbroker services. These criteria included the accuracy of stockbrokers’ information, the speed with which accounts are settled and the brokers’ willingness to give valuable service to investors. These 14 variables, which measure investor satisfaction with stockbroker services, were subjected to factor analysis. With the use of component analysis, four factors were identified: satisfaction with stockbroker services, stockbroker regulations, stockbroker transactional services and stockbrokers’ image in the eyes of investors, which explained 72.55% of the variation in the data. With the use of ordinal regression analysis, it was discovered that these four criteria have a considerable impact on investors’ trust and confidence in stockbrokers. Research limitations/implications The current study, which is being conducted at the state level, might be expanded to include the entire country. It might be possible to look into the impact of retail capital market investment on rural investors. The research might be expanded to include a look at how reforms affect the functioning of stock markets. A study on the awareness of retail investment trends among women investors could be conducted. It is possible to investigate the ramifications of internet stock trading in India. It is possible to investigate the impact of technical innovation on capital markets. In this study, a survey has been conducted, in the future, the behavior of the investors can be observed to analyze whether they are satisfied with the services of stockbrokers or not. Practical implications This research would be extremely beneficial to investors who make investment decisions and employ stockbrokers to help them make those selections. Because with the aid of the factors revealed investors can match the service quality of their own intermediary and only if they will be satisfied they will trust their intermediary. Social implications This research will aid stockbrokers in providing investors with efficient and effective services. As they will have knowledge about the needs and aspirations of their clients, they will try to render their services as per their expectations. This will ultimately lead to the satisfaction of the retail equity investors, and they will have trust and confidence in the services provided by the stockbrokers. The present study helps the stockbrokers in understanding the fact that the qualitative aspects of their services are crucial for building investors’ trust and confidence otherwise investors will not be satisfied with their services. This study is extremely important for government as well. They can also take cues from witnessed the positive impact of their regulations on the quality of the stockbrokers’ services. This improvement in the quality of stockbroker services has further enhanced the trust and confidence of investors. Regulations are essential for improving the quality of stockbrokers’ services. Originality/value This paper reveals that a variety of factors, i.e. satisfaction with stockbroker services, stockbroker regulations, stockbroker transactional services and stockbrokers’ image in the eyes of investors influence retail equities investors’ trust and faith in brokerage services.