Faculty of Management Sciences & Liberal Arts

MASTER OF BUSINESS ADMINISTRATION

Research Project:

Saving And Investment Behavior Of

University Students in India

Project Guide: Mr. Munish Sahrawat

President and Dean FMS

Project Members:

Harsh Prajapati (PGD20227905)

Sparsh Puri (PGD20227658)

Aastha Tiwari (PGD20225666)

 PROJECT PROPOSAL

Research Topic: Saving and Investment Behaviour Of University Students in India

Overview:

Saving and investment behavior is an important aspect of financial literacy and has a significant impact on an
individual's financial well-being. University students are a critical demographic for understanding saving and
investment behavior as they are at a stage in their lives where they are beginning to make financial decisions that
will have a long-term impact on their future. University students are a critical demographic for understanding
saving and investment behavior. They are at a stage in their lives where they are beginning to make financial
decisions that will have a significant impact on their future. This project will investigate the saving and
investment behavior of university students in India.

Background:

India is a nation that is quickly developing, with a huge and expanding youth population. Among them are a
large number of university students. A target market for financial organizations is also such individuals.
Financial institutions have to know the saving and investing habits of college students in order to create goods
and services that appeal to this market. India's burgeoning economy witnesses dynamic financial behaviors
among university students, crucial for understanding their impact on personal wealth, economic stability, and
societal progress. This research explores factors influencing savings and investment choices, offering actionable
insights for educators, policymakers, and financial institutions. The study aims to contribute academically and
practically, fostering a financially resilient and prosperous future.

Research Objectives:

 Identify the factors that influence the saving and investment behavior of university students in India.

 Develop a profile of the typical university student saver and investor in India.

 Assess the level of financial literacy among university students in India.

 Identify the challenges and opportunities for promoting saving and investment among university students
in India.
Research Methodology

 A literature review of existing research on saving and investment behavior of university students.

 A survey of university students in India to collect data on their saving and investment habits.

 Focus group discussions with university students to get in-depth insights into their saving and investment
decisions.

Tools and methods:

Literature Review: Search engines, such as Google Scholar and Microsoft Academic

Survey Development: Online survey platforms, such as Google Forms and SurveyGizmo

Survey Data Collection: Email distribution lists, Social media groups, University student organizations

Data Analysis: Statistical software, if needed such as SPSS and R, Data visualization software, such as Tableau
and Power BI

Report Writing: Word processing software, such as Microsoft Word and Google Docs

In addition to these tools and methods, these may also need to access the resources:

 University libraries

 Government data sources

 Financial institutions

The specific tools and methods that are used will depend on the specific research questions and methodology.
Project timeline:

Phases Duration Activities

Phase 1: 1 Week * Identify relevant academic journals and databases * Conduct a
Literature comprehensive search for existing research on the topic * Review and analyse
Review the findings of relevant studies

Phase 2: 1 Week * Design a survey questionnaire to collect data on the saving and investment
Survey behaviour of university students * Pilot test the survey questionnaire to ensure
Development its validity and reliability * Finalize the survey questionnaire

Phase 3: 3 Week * Obtain ethical approval for the research study * Distribute the survey
Survey Data questionnaire to a representative sample of university students * Collect and
Collection clean the survey data

Phase 4: 2 Week * Recruit university students to participate in focus group discussions *

Focus Group Conduct focus group discussions to gather in-depth insights into the saving and
Discussions investment decisions of university students * Transcribe and analyse the focus
group discussions
Phase 5: 3 Week * Analyse the qualitative data from the focus group discussions * Identify
Data patterns and trends in the saving and investment behaviour of university
Analysis students
Phase 6: 1 Week * Prepare a comprehensive research report summarizing the findings of the
Report study * Discuss the implications of the findings for financial institutions,
Writing policymakers, and university students.
Introduction:

With increase in per capita income and westernization, the savings and investment pattern has gone under a
drastic change. Robust savings rate coupled with capital mobilization plays a significant role in the economic
growth. While the initial policies in India were socialistic in nature but the current policies are more market
driven giving a free rein to the economy. The increase in per capita income and GDP growth were accompanied
with improvement in rate of investment and savings. With the increase in standard of living, the youth have been
empowered with more purchasing power.

India has one of the youngest populations in the world, with more than half of its population being below the age
of 25. This demographic advantage presents a unique opportunity for the country's economic growth, as the
youth population is a key driver of economic activity. However, for the country to fully capitalize on this
demographic advantage, it is important to understand the investment behavior of its youth population.

Investment is crucial for individuals to secure their financial future and achieve their long-term financial goals.
It is also important for the overall economic growth of a country, as investment leads to the creation of jobs and
the development of new industries. However, youth in India are known to have a low savings rate, and they tend
to invest less in financial assets compared to their older counterparts. This is a cause for concern, as it could have
a significant impact on their long-term financial well-being and the country's economic growth.

It is pertinent at this point to explain the terminologies of saving and investment used during the survey.

Defining Savings

“Saving” means foregoing one’s current consumption in favor of having an option to

consume more in the future. Hence, saving is the tradeoff between consuming today and
consuming tomorrow. Saving can be done for a multiplicity of purposes – guarding against
future contingencies, for known events in the future (a child’s marriage, to purchase a house),
for acquiring wealth, etc.

Savings can be in two major forms:

1. Physical Savings – Savings converted into physical assets.
2. Financial Savings – Savings put into financial instruments like Bank Deposits,
Shares, Securities, etc.

Savings if properly mobilized can help trade and commerce prosper. Financial savings are
more liquid and hence more easily mobilized than physical savings. The current study covers
financial savings as they are more relevant to students who have just started earning.
Defining Investment

Investment is “saving”, to be used by another party for productive activity. It can be in the
form of an advance or loan or contributing to the ownership capital or debt capital of a
corporate or non-corporate business unit. Generalized, investment means conversion of cash
or money into a monetary asset or a claim on future money for a return. This return is for
saving, particularly financial saving, parting with liquidity and lastly for taking a risk
Investment Pattern of Youth in India specifically university students.
Investment Option Available:
There are a large number of investment instruments available today. People have to choose proper avenue among
those available, depending upon their specific need, risk preference,and return that are expected.

Different Investment avenues can be broadly categories under the following heads:

 Equity
 Debt
 Mutual Funds
 Corporate
 Debentures
 Company Fixed Deposits
 Fixed Deposits
 Post office Savings
 Public Provident Fund
 Real Estate
 Life Insurance
 Gold/Silver/Other

Review of literature:

A literature review of the research on the behavior of youth , studying in universities towards investment in India
shows that there is a lack of proper knowledge on this topic. However, there are a few studies that have looked at
the financial behavior and decision-making of young students in India, which provide some insight into the
investment behavior.

A study, by Bhandari and Mishra (2015), found that a lack of financial literacy is a major barrier to investment
among youth in India. The study surveyed college students in India and found that the majority had low levels
of financial literacy and a lack of knowledge about financial products and services.

A study, by Bhat and Bhat (2016), found that cultural and social norms also play a role in shaping the investment
behavior of youth in India. The study found that traditional cultural values, such as a preference for saving in
physical assets rather than financial assets, and social norms that discourage taking financial risks, can
discourage youth from investing in financial assets.

A study conducted by the Reserve Bank of India (RBI) in 2017 found that young people in India have a low
level of financial literacy and a lack of access to financial education. The study also found that young people in
India tend to invest in physical assets, such as gold and property, rather than financial assets.
A study published in the Journal of Financial Planning and Management in 2018, investigated the financial
behavior of Indian youth and found that lack of knowledge, trust and confidence in financial institutions, and
lack of financial products and services tailored to their needs are major barriers for youth investment in India.

A study by Sharma and Singh (2018) investigated the influence of economic and political environment in
shaping the investment behavior of youth in India. The study found that a stable and predictable economic and
political environment is positively associated with investment behavior of youth, while an unstable and uncertain
environment discourages investment.

A study published in International Journal of Indian Culture and Business Management in 2019, found that
cultural and social norms, such as the traditional preference for physical assets, and the social pressure to
conform to these norms, play a significant role in shaping the investment behavior of youth in India.

A study, published in Journal of Business Management and Economics in 2020, it was found that the economic
and political environment, such as the level of economic growth, inflation, interest rates, government regulations,
and the stability of the political system, also play a role in shaping the investment behavior of youth in India.

1. Nationwide Trends in Student Financial Behavior: Review research on Indian university students' financial
practices to find recurring themes and variances. Examine the effects that cultural and economic issues have on
students' financial choices.

2. Financial Literacy Programs and their Impact: The findings of studies on financial literacy initiatives for
college students have been conflicting. Certain programs are more successful than others in improving financial
practices and knowledge. Comprehending the constituents of efficacious financial literacy endeavors is important
in formulating educational efforts that effectively cater to the distinct requirements of college attendees.

3. Socioeconomic Status and the Making of Financial Decisions: Students saving and investing habits are
greatly influenced by their socioeconomic backgrounds. Research suggests that students from wealthier
households might be more inclined to invest, whereas students from poorer families would be more focused on
short-term financial objectives. Family influence, financial education, and resource availability all play major
roles in influencing financial decisions.

4. Technological Impact on Financial Habits: The way that university students save and invest has changed as
a result of the emergence of financial technology, or fintech. Studies indicate that students are increasingly using
digital platforms for investing and banking. It's critical to comprehend how technology changes affect financial
decision-making in order to modify teaching methods and encourage appropriate usage of digital financial
instruments.

5. Psychological Factors in Financial Decision-Making: University students' saving and investing behavior is
greatly influenced by psychological factors, including behavioral biases, attitudes toward money, and risk
perception. Research in behavioral economics suggests that cognitive biases can result in less than ideal financial
choices. Examining these psychological factors offers information that can be used to create focused therapies
that enhance financial decision-making.
Research Methodology:

Sampling Strategy:

 Adopt a stratified random sampling approach to ensure representation from diverse universities, academic
disciplines, and socioeconomic backgrounds. This will enhance the generalization of findings.

Data Collection Instruments:

 Utilize a structured questionnaire to collect quantitative data on savings habits, investment knowledge, risk
tolerance, and financial goals. The questionnaire should be designed to capture demographic information to
analyze variations based on factors such as gender, academic discipline, and income levels.
 Conduct semi-structured interviews to gather qualitative insights into the underlying reasons and motivations
behind specific savings and investment behaviors.
 Conduct focus group discussions to gather in-depth insights into the saving and investment decisions of
university students and then transcribe and analyse the focus group discussions.

Data Analysis Techniques:

 Employ descriptive statistics to analyze quantitative data, providing an overview of savings and investment
patterns among university students.
 Utilize inferential statistics, such as regression analysis, to identify significant predictors of savings and
investment behaviors.
 Conduct thematic analysis for qualitative data, identifying common themes and patterns that may not be
captured through quantitative measures.

Ethical Considerations:

 Obtain informed consent from participants, ensuring transparency about the research objectives and the use
of collected data.
 Ensure confidentiality and anonymity in reporting findings to protect the privacy of participants.

Limitations:

 Acknowledge potential limitations, such as the self-reporting bias inherent in survey research and the cross-
sectional nature of the study.
 Clearly define the scope and boundaries of the research to provide a realistic assessment of the study's
applicability.

This comprehensive research design aims to investigate the savings and investment behavior of university
students, combining quantitative and qualitative methods to provide a nuanced understanding of the factors
influencing their financial decisions.
Data Analysis:

The cornerstone of any investment strategy is to maximize the return while maintaining a
tolerable risk. The process of allocating assets among several investment categories is a way
of achieving the goal. Younger people can assume greater risk than one who is retired; a
highly paid executive will be less dependent on current portfolio income than will a disabled
person on workmen’s compensation and so forth. The goal of an individual may be current
income, capital appreciation or an acceptable balance. If the investor decides on capital
appreciation, the investors should have the personality to ride out major decline in the market.

To understand the nature or behavior pattern of savings and investments of university students we circulated a
questionnaire to various universities in different locations of India such as

 Shoolini University, Solan

 Graphic Era, Dehradun
 Chandigarh University, Chandigarh
 DAV University, Jalandhar
 IIT Delhi
 Kanpur University & more

The primary data collection consisted of a structured questionnaire with limited and focused questions that
covered questions related to saving/investment behavior of students. The survey asked how much
(approximately) of their income is saved, whether it is invested in traditional savings methods or capital markets,
and how much social factors such as friends and family influence their choices. Approximately of the contact
base (128 respondents) will be sufficient information to be included in the survey sample. The focus was also on
students who were working or having a source of income and studying at the same time. Students ranged in age
from 17 to 30, with the majority being in the 22–23 age range. The respondents have a variety of bachelor's and
master's degrees from various academic programs.

These charts indicate what saving and investment behavior the university students displayed as a group. There
are 57% male respondents and 43% female respondents, indicating that students are distributed by gender
Results:

1. According to the questionnaire that was distributed, more than 80% of Indian university students' main source
of income came from pocket money or assistance from their families. Merely 7% of the respondents derived their
income from part-time occupations, while little more than 5% did so from stipends.

2. The financial constraints faced by students with a monthly allowance or income ranging from Rs1000 to
Rs3000 underscored the challenges in meeting various essential expenses. These included not only personal care
and education-related costs but also entertainment expenses, creating a financial burden that exceeded the
available resources.

 For a significant portion of students falling within the income bracket of Rs3000 to Rs7000, constituting
26.6% of the surveyed population, the financial situation appeared relatively more stable. This group could
potentially allocate funds more comfortably across different aspects of their lives, striking a balance between
personal needs, academic requirements, and leisure activities.

 Surprisingly, students with an income exceeding Rs10,000 accounted for 21.1% of the respondents. This
subset of the student population enjoyed a more substantial financial footing, allowing them to cover their
expenses with greater ease.

3. The financial landscape for university students reveals a hierarchy of expenditures, with food and groceries
emerging as the paramount concern. This primary allocation underscores the significance of meeting basic
sustenance needs during the academic journey. Following closely, clothing and personal care expenditures reflect
a commitment to maintaining a desirable standard of living and personal hygiene.

Surprisingly, education-related expenses occupy the fifth position in the financial priority list, superseded by
transportation costs. This ranking highlights the practical challenges associated with commuting, emphasizing
the monetary strain imposed by travel to and from campus. Understanding these expenditure patterns illuminates
the complex budgetary considerations students navigate

4. The predominant choice of government banks, notably the State Bank of India, as the primary financial
institution for students indicates a prevailing hesitancy among parents to embrace private banks in India. Despite
the evident advantages and a broader spectrum of services offered by private banks, the reluctance to transition
underscores a deeply ingrained cautious attitude towards entrusting one's financial matters to relatively newer
entities. This hesitancy reflects a cultural preference for stability and long-standing institutions when it comes to
handling personal finances, showcasing a conservative approach that resonates with many Indian families.

Furthermore, the lower incidence of students burdened with student loans or debt signifies a financial prudence
within this student demographic. This trend aligns with the cultural inclination to avoid unnecessary financial
obligations and debts, emphasizing a preference for self-sufficiency in funding education.

5. The study reveals a noteworthy trend among students, with over 70% demonstrating financial prudence by
saving a portion of their income or allowance. This inclination towards saving is a positive indicator of a
responsible approach to personal finance among the student population. However, the average understanding of
personal finance among these students raises concerns, highlighting a potential gap in financial literacy.

 A key factor contributing to this gap is the striking finding that less than 35% of students have received any
formal education on financial management from their colleges or universities. This deficiency in financial
education suggests a missed opportunity for institutions to empower students with essential skills for
managing their finances effectively. As a result, students may be saving without a comprehensive
understanding of long-term financial planning, investment strategies, and other crucial aspects of personal
finance.

 Digging deeper into the saving habits of students, a nuanced picture emerges. While more than 70% are
committed to saving, around 50% of students are putting away only 10 to 20% of their monthly income. A
further 15% manage to save 20 to 30% of their income, indicating a relatively lower percentage of students
with more substantial savings. The reliance on savings accounts for storing their money suggests a
conservative approach to financial management, but the modest percentages being saved may reflect a
limited capacity for long-term financial goals.

6. The majority of students exhibit a commendable commitment to financial planning, articulating specific goals
for their savings. However, family influence emerges as a significant determinant in their financial decisions,
underscoring the enduring impact of traditional values on their approach to money matters.

 While over 60% of students display a commendable familiarity with various investment options available in
India, the actual involvement in more sophisticated financial instruments, such as stocks, mutual funds, or
other investment vehicles, remains relatively low at less than 45%. This discrepancy suggests a potential gap
between knowledge and implementation, with a notable portion of students choosing familiar and
conventional savings avenues.

 Exploring the students' risk tolerance in investments reveals a striking consensus—a preference for options
characterized by moderate risk and moderate returns. This inclination aligns with the observed investment
choices, primarily in mutual funds and Fixed Deposits/Recurring Deposits. The emphasis on moderate-risk
options indicates a cautious and measured approach to wealth creation, reflecting a desire for financial
growth without exposure to undue volatility or high-risk scenarios.
 In essence, the financial behavior of university students mirrors a balance between ambition and prudence.
Specific financial goals demonstrate forward-thinking, while the prevalence of conservative investment
choices reflects a desire for stability and financial security.

7. When asked if they had limited cash at their disposal what would they prefer conserving money or investing
that money most students preferred to invest that money rather than save that money. Furthermore, the majority
of students utilize social media, which is not a reliable source of financial information, to keep up with
investment opportunities and financial news.

Discussion:

 The study on the behavior of University students on savings and investment in India provides valuable
insights into the challenges and opportunities faced by this population when it comes to investing. The
research has shown that the youth in India are facing several barriers to investing, such as lack of financial
education and access to investment opportunities, short-term financial priorities, and fear of risk. However,
the research also highlighted that despite these challenges, the students are showing an increasing interest in
investment and are willing to take on some level of risk to achieve higher returns.

 Access to investment opportunities is another challenge faced by university students. The research indicates
that more than 60% of students are familiar with investment options in India, but less than 45% have ever
invested in stocks, mutual funds, or other financial instruments. This gap suggests that while awareness
exists, there is a disconnect between knowledge and practical implementation, limiting the youth's exposure
to diverse investment avenues.

 Short-term financial priorities emerge as a barrier, particularly for students with a monthly allowance or
income ranging from Rs1000 to Rs3000. The financial constraints within this income bracket make it
challenging to prioritize long-term investments over immediate personal care, education-related costs, and
entertainment expenses.

 The fear of risk is a psychological barrier that influences investment decisions. Even though students express
a preference for options characterized by moderate risk and moderate returns, there is an underlying
hesitation to embrace more sophisticated financial instruments. This fear may stem from a lack of
experience, confidence, or understanding of the potential benefits of diversified and risk-appropriate
investment

 The findings of this study suggest that there is a need for increased financial education and access to
investment opportunities for the university students in India. This can be done through initiatives such as
financial literacy programs in colleges and online resources. Additionally, policymakers and industry
stakeholders should work together to create more accessible and user-friendly investment options for the
youth.

 The study also suggests that future research should focus on identifying specific barriers that prevent the
youth in India from investing and on developing effective strategies to overcome them. Additionally,
research on the impact of demographic, cultural, and societal factors on the investment behavior of the youth
in India would be informative.
Conclusion and Recommendation:

The study on the behavior of university students regarding savings and investment in India provides a
comprehensive snapshot of the challenges and opportunities faced by the youth in managing their finances.
While barriers such as limited financial education, constrained access to investment opportunities, short-term
financial priorities, and fear of risk exist, there is a palpable interest and willingness among students to engage in
investments.

Addressing the challenges requires a concerted effort from educational institutions, policymakers, and industry
stakeholders. By enhancing financial education, improving access to investment options, promoting diversified
investment strategies, and considering cultural and demographic factors, a more financially empowered and
savvy youth population can be cultivated

Recommendations for Addressing Challenges:

To quote J. Kenfield Morley, “In investing money, the amount of interest you want should
depend on whether you want to eat well or sleep well”. An individual investor should keep
the following points in mind while taking the decisions related to savings and investment of
the savings:

To address the identified challenges and leverage emerging opportunities, a multifaceted approach is necessary.

Enhanced Financial Education:

There is an urgent need for increased financial education for university students in India. Colleges and
universities can introduce comprehensive financial literacy programs as part of the curriculum. These programs
should cover fundamental concepts of personal finance, investment strategies, and the importance of long-term
financial planning. Additionally, online resources can serve as supplementary tools to reinforce financial
education.

Improved Access to Investment Opportunities:

Policymakers and industry stakeholders should collaborate to create more accessible and user-friendly
investment options tailored to the preferences and capabilities of the youth. This could involve simplifying the
investment process, reducing entry barriers, and leveraging technology to enhance accessibility. Furthermore,
financial institutions can design specialized investment products that align with the short-term financial priorities
of students.

Promotion of Diversified Investment Strategies:

Efforts should be directed towards demystifying the fear of risk associated with investments. Educational
campaigns and workshops can be organized to inform students about the benefits of diversified investment
strategies, the potential for long-term wealth creation, and the importance of managing risk through informed
decision-making. Real-life case studies and success stories can be instrumental in building confidence among
students.
Cultural and Demographic Considerations:
Future research should delve into the impact of demographic, cultural, and societal factors on the investment
behavior of the youth in India. Understanding how cultural norms and societal expectations influence financial
decisions can guide the development of targeted interventions that resonate with the unique context of Indian
society.

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Prakashan, New Delhi, 1999, pp. 21-151

2. Ghumman, R. K. (2017). Emerging Saving and Investment Pattern Among Youngsters -

A Case Study. - International Journal of Research and Analytical Reviews.

3. Jariah , M., Husniyah, A., Laily, P., & Britt, S. (2004). Financial Behavior and Problems
Among University Students: Need for Financial Education. Journal of Personal Finance, 82-96.

4. Confederation of Indian Industry (CII) and PwC India (2017). Youth and Money: The Way Forward.

5. Agarwal, R., Srivastava, R., & Srivastava, R. (2017). Factors influencing the investment behavior of Indian
youth. International Journal of Indian Culture and Business Management, 15(1), 1-13.

6. Bhuyan, S., & Sahoo, S. (2018). Investment behavior of youth in India. International Journal of Indian Culture
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