Exploring the Dimensions of Investors' Trust in an Emerging Market

Abstract

This study analyses the impact of various factors, namely macroeconomic policies, the legal environment, investor awareness, institutional capabilities, and market practices, on the perceived benefits of Nepal's stock market. The study employed a quantitative research design including descriptive and causal effects. A total of 402 responses were used from a survey employing a non-probability sampling technique. The results indicate that legal and regulatory structures, institutional framework, investor education, and market intermediary performance significantly enhance investor perceptions. However, the results indicate a significant and negative effect of regulators’ roles, indicating poorly articulated policies that discourage investors. The macroeconomic policies and market practices showed an insignificant impact. It is concluded that the proper functioning and sustainable development of Nepal's stock market require harmonized efforts from policymakers, regulators, intermediaries, and investors, supported by the close integration of multidimensional aspects of operational effectiveness, well established infrastructure, professional integrity, and digital transformation. The study contributes to research on capital market development by providing evidence on the dynamics of institutional and market-related factors that drive investor sentiment and shape capital markets in emerging nations.