The Impact of buy-on-margin service on the performance of Vietnamese brokerage firms

Abstract

Brokerage firms, one of the market participant types significantly contributing to the general development of the stock market of Vietnam over past 20 years, have never ceased to develop their products supporting investors’ stock tradings, including buy-on-margin (BoM) service to provide investors with better market access and more porfolio diversification opportunities, eventually contribute to improve the trading volume and market liquidity (Van Giap, 2021). Besides, developing BoM service could increase the profitability of brokerage firms, creating motivation and financial resource for their further development paths. This paper, by deploying fixed effect and random effect models, extracts empirical evidences, assuring the positive impact of BoM service on the performance of 27 listed brokerage firms in Vietnam during the period of 2014-2020. Thereby, some policy recommendations are drawn to promote this service at brokerage firms.