Artha: Journal of Business and Finance

From Markets to Micro-Credit The Behavioral Biases Linking Indian Investment Mistakes and BNPL Mismanagement

Pranay Seth

Mithibai College, Mumbai University

Keywords: Behavioral Finance, Buy Now Pay Later (BNPL), Cognitive Biases, Digital Finance, Financial Literacy, Consumer Behavior

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Abstract

The distinction between borrowing and investing is becoming more hazy in today's quickly changing financial environment, but the psychology underlying both is remarkably similar. This article explains how the increasing abuse of Buy Now Pay Later (BNPL) services is being fuelled by the same behavioural biases that cause Indian investors to make expensive market errors. Overconfidence, herd mentality, present bias, loss aversion, and mental accounting are examples of biases that systematically influence how people view risk, reward, and financial responsibility. These biases are amplified in ways that can subtly undermine financial well-being in light of India's youthful population, growing digital finance ecosystem, and gaps in financial literacy. Digital
platforms often promote impulsive decisions, short-term thinking, and a risky underestimation of long- term consequences, despite their promises of accessibility and convenience. People are increasingly motivated by emotion rather than reason, from chasing trending stocks to accruing undetected BNPL obligations.
This article encourages readers to reconsider routine financial decisions by making a strong comparison between market behaviour and the use of microcredit. It contends that the very tools intended to empower users can turn into sources of financial vulnerability in the absence of greater financial discipline and conscious awareness. In order to successfully navigate the challenges of a digital-first economy, the paper ultimately advocates for a shift toward more knowledgeable, considerate, and responsible financial behaviour.

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Author Biography

Pranay Seth, Mithibai College, Mumbai University

Pranay Seth is a third-year B.Com Accounting and Finance student at Mithibai College, Mumbai University. His interests include behavioral finance, digital payments, and emerging trends in financial technology. He enjoys research-based writing and exploring how consumer psychology influences financial decision-making in India.

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References