The rapid growth of digitally originated consumer credit has transformed consumption patterns, particularly in the financing of consumer durable and semi-durable goods through embedded credit mechanisms. While such innovations have improved access and convenience, they have also raised concerns regarding their impact on consumer behavior and institutional financial risk. This study introduces the concept of the Digital Bullwhip Effect, which explains how digital credit design features—specifically credit-based price framing and low interface friction—can amplify demand and propagate risk across financial systems. Adopting a quantitative research design, primary data were collected from 166 users of digital credit platforms in India through a structured questionnaire. The study examines the relationships between digital credit design, consumer perceptions, credit uptake, and institutional risk using reliability and correlation-based analysis. The findings indicate that credit-based price framing significantly influences perceived affordability, while reduced interface friction accelerates decision-making. These behavioral responses contribute to increased reliance on digital credit, which is associated with higher levels of perceived liquidity stress and asset quality risk. The results also suggest that financial literacy and macroeconomic conditions play moderating roles in shaping credit usage behavior. The study highlights the importance of considering digital credit as a behaviorally embedded system rather than merely a financial product. By linking interface design to systemic financial outcomes, the research provides insights for financial institutions, policymakers, and platform designers to promote responsible credit practices and sustainable financial ecosystems.
Mankala Pushkar (Thu,) studied this question.