BEHAVIOUR FINANCE STRATEGIES: THE ROLE OF NUDGE THEORY IN ENHANCING FINANCIAL WELL-BEING IN INDIA’S MUTUAL FUND LANDSCAPE

Abstract

The financial sector has transformed in the lastdecadeand with array of products and options, theapplication ofbehavioural economicsandespecially the Nudgetheory can prove as a great toolto increase participation , aiding last mile delivery of incentives leading to Financial wellbeingof citizens .The research examinesthe application in Indian Mutual fund Industry, which is one thefastest growing sector among financial services. With a population of 144 crores , there are only 3.5 croresIndian mutual investors which underlines the need of using the Nudge theory effectively to increase investor base. The researchexplores the variousnudge methods such as default options , framing, simplification and social proof and its impact on positive financial behaviours . The study has used literature review and interview of the stakeholders to present both the theoretical and practicalaspects. The findings of the study indicate that effective application of the nudge techniques such as simplified documentation , auto- enrolment, fintech nudgesand peer success stories have shown transformative and tangible impact on investor behaviours leading to higher participation. The analysisof the expert interview further confirm the practical application of the successful nudges and suggest options like digital platforms , financial literacy and regulatory and policy push tohelp effectivelyintegrate nudges in market framework. In conclusionthat to achieve the vision of financially empowered nation , adopting and applying nudges will be an effective instrument for Financial inclusion and Financial well-being