Consumer behaviour regarding stock market participation in South Africa

Abstract

South Africa (SA) has a highly sophisticated financial services sector that contributes significantly to the economy. A stock market forms a significant component of the financial sector of any economy. While the Johannesburg Stock Exchange (JSE) has managed to arouse interest of many South Africans, there appears to be apathy and inertia when it comes to actual participation in the stock market by South African consumers. Stock market non-participation is considered a “puzzle” in microeconomics and finance literature because it is not easy to explain the reason why many consumers, in spite of high stock returns, do not own listed shares. Thus, the primary objective of this study was to investigate consumer behaviour regarding stock market participation in SA by considering the antecedents and outcomes of stock market participation in SA.The study presented a theoretical literature review on the factors influencing stock market participation in SA. From the literature review, three sets of variables classified as independent variables, an intervening variable and dependent variables were identified. The independent variables (Demographic characteristics; Financial literacy; Investment risk tolerance; Communication; and Consumer trust) were identified as possibly influencing the intervening variable (Stock market participation) and ultimately the dependent variables (Client satisfaction and loyalty, Financial sustainability and Repurchase intentions). These variables were used to construct a hypothesised model and research hypotheses. The study further presented the research methodology (following a positivistic paradigm and quantitative research method), and the results of this study. In order to establish the influence of the independent variables on stock market participation, as well as ultimate influences on the dependent variables, an empirical investigation was conducted. Since it was not possible to reach all members of the target population, the population of this study was South African consumers located in four of the nine provinces, namely, Eastern Cape, Western Cape, Kwa-Zulu Natal and Gauteng. A sample of 510 respondents participated in the study