Vol. 7, Issue 2, Part E (2025)

This literature review investigates the effects of digital literacy and behavioral biases on investing and savings habits of business school students in India. With the expansion of digital financial platforms and greater access to financial data, digital literacy as the extent to which one can utilize digital tools in making financial decisions is a key driver of financial behavior. At the same time, behavioral biases like overconfidence, herd behavior, framing effect, and present bias greatly influence the behavior of young investors and savers. The review canvasses empirical and theoretical research from India and other analogous emerging economies, referencing patterns unique to business school students. Findings central to the key outcomes identify that higher digital literacy is more likely to lead to more involvement in formal investing and focused savings, but some biases persist even with high literacy. For example, overconfident students will overtrade through discount trading apps; herd behavior is seen in peer portfolio mimicry; and present bias results in under-saving even when aware. The paper further examines the mediating function of digital instruments in either reducing or reinforcing biases. For this review, the paper provides methodological directions for future research and outlines gaps, making recommendations to educators and policymakers. These findings seek to guide curriculum development in Indian business schools and financial inclusion policies.