Debt Use in an Emerging Stock Market : The Role of Investment Horizons Strategy

The use of debt in the stock market is not a new theme, but the determinants of this phenomenon are underexplored. Based on survey data on individual investors in the Vietnam stock market, our results indicate that investment horizons are the key predictors of debt use in the stock market. Higher short-term stock investment horizons have a positive effect on debt use, while long-term horizons have a negative effect after we control for nine demographic variables. There is a significant gender difference. In addition, the investment horizons work differently based on investors’ marital status.Our findings suggest that policy makers should be alert when individual investors focused on short-term holdings, as investors are then more likely to use debt to invest in stocks, which may increase financial instability