Navigating selected perceived risk elements on investor trust and intention to invest in online trading platforms

Abstract

Orientation: In the contemporary global business environment, online trading is a new distribution channel and trading platforms are products of investment and financial services companies. Research purpose: This study determined the influence of perceived risk elements on investor trust and the intention to invest in online trading platforms among students at a selected university in South Africa. Motivation for the study: The significance of how perceived risk elements may influence an investor’s trust and the intention to invest in online trading has largely been overlooked in previous research. Therefore, the principal objective of this study was to address this research gap. Research approach, design and method: A structural equation modelling (SEM) procedure was applied to perform the hypotheses testing using the AMOS (version 25.0) package. Main findings: All the perceived risk elements had a positive and a significant impact on investor trust as well as the intention to invest in online trading platforms. Practical/managerial implications: This study provides fruitful implications to practitioners. The collective knowledge on dimensions of perceived risk will be advantageous to managers in understanding consumer risk perception and how students attempt to reduce these risks. Hence, this will also help managers to implement risk-reduction strategies in order to increase the prospect of students investing in their online trading platforms. Contribution/value-add: This study stands to add new knowledge to the present body of investment management and financial management literature in Africa – a context that has not received much research attention in developing countries.

Keywords

• perceived security risk
• perceived privacy risk
• perceived financial risk
• perceived fraud risk
• investor trust
• intention to invest
• online trading platforms