An Empirical Investigation of Problems and Prospects of Internet Stock Trading

Abstract

Advances in technology have radically changed the process of trading shares. Today, with the growing awareness and popularity of the Internet, the stock brokerage industry has started to take advantage of the vast opportunities presented by this new medium at both the retail and institutional levels. This paper examines the problems as also identifies reasons for not using Net as a medium of trading besides bringing out its prospects. The study is based on primary data of 98 brokers comprising 46 Net brokers and 52 non-internet brokers. The results of the paper reveal that sudden breakdown of Web server or Internet connection, risk of system or component failure, and infrastructural and psychological impediments are perceived as major problems by Net brokers. It is also found that sudden breakdown of Web server, requirement of very strong infrastructural setup, high transaction costs, lack of personal touch, and delayed-quotes are judged as major reasons accountable for non-adoption of Internet trading facility by non-Net brokers. In spite of problems and the associated reasons, Net is found to be an innovative medium of trading shares and its future seems very promising.