A Study on Digital Financial Behaviour, Behavioural Biases, and Investment Decision-Making specifically in Indore Region
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Abstract
The rapid expansion of digital financial services and fintech platforms has significantly transformed the financial behaviour of households in India. Increasing adoption of digital wallets, mobile banking, Unified Payments Interface (UPI), internet banking, and online investment platforms has changed the saving, spending, and investment patterns of middle-class households. However, despite greater access to financial information and digital financial services, household investment decisions continue to be influenced by behavioural biases and varying levels of financial risk tolerance. Behavioural finance explains that investors do not always behave rationally and are often affected by psychological, emotional, and social factors while making financial decisions.
The present study aims to examine the influence of digital financial behaviour, behavioural biases, financial literacy, and risk tolerance on investment decision-making among middle-class households in the Indore region. The study focuses on major behavioural biases such as overconfidence bias, herd behaviour, loss aversion, anchoring bias, and mental accounting, and analyzes how these factors affect household investment preferences. The research further investigates the role of digital financial adoption in shaping investment diversification and participation in modern financial instruments.
The study adopts a descriptive and analytical research design based on a quantitative research approach. Primary data are proposed to be collected through a structured questionnaire from middle-class households in the Indore region. Secondary data are collected from research journals, books, RBI reports, financial publications, and academic databases. Statistical tools such as descriptive statistics, reliability analysis, correlation analysis, regression analysis, factor analysis, ANOVA, and hypothesis testing are proposed to analyze the collected data.
The findings of the study are expected to reveal that digital financial adoption positively influences financial participation and investment awareness among middle-class households. However, behavioural biases continue to significantly affect investment decisions, particularly in relation to risk perception and investment preferences. The study is also expected to indicate that financially literate households with higher risk tolerance are more likely to participate in market-linked investment avenues such as mutual funds and equity shares, whereas risk-averse households prefer safer investment options such as fixed deposits, insurance, and gold.
The study contributes to the growing literature on behavioural finance and digital financial behaviour by providing region-specific insights into household investment behaviour in the Indore region. The findings may assist financial advisors, policymakers, fintech companies, and financial institutions in designing investor-oriented financial products, financial literacy initiatives, and awareness programs that promote rational investment behaviour and long-term financial stability among middle-class households.
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