Impact Of Demonetization Research Articles

The impact of demonetization on microfinance institutions

Microfinance institutions (MFIs) must balance financial and social goals. When these coopetitive goals are under threat, which goals do MFIs prefer? Based on the theory of myopic loss aversion, our study aims to assess the immediate effect of the 2016 demonetization in India on MFIs and their loan portfolio performance and on unintended social outcomes. Using the 2016 demonetization in India as a quasi-experiment, we find that MFIs had a lower 30-day and 90-day portfolio at risk (PAR) and implemented better client protection terms. In addition, demonetization had a small but positive effect on developing start-up enterprises and serving more clients below the poverty line. Last, we find that MFIs investing in female client education presented a lower PAR after demonetization. Overall, our study sheds light on the unintended consequences on MFIs as a result of the demonetization event, and it provides policy implications for MFIs.

Decrypting Demonetization and its impact on the sustainable economic growth in India

This paper addresses the impact of Demonetization on sustainable economic growth in India after five years of Demonetisation in India. The study is exploratory. The data was collected through purposive sampling. Bank Managers, academicians and scholars located in New Delhi were interviewed. The unstructured interview schedule was used. The data pointed out that Demonetization adversely impacted the sustainable economic growth, as the informal sector in India, which constitutes more than ninety per cent of the total population of India, got severely affected by this move and was unable to continue contributing to the economy of India as the sector was doing in the pre-demonetization period. This paper will help understand the phenomena of Demonetization and the impact of the call for Demonetization on the sustainability of the Indian economy. Since the concept has not been researched sufficiently in the country, therefore, has ample scope to study further. The small sample size and location were the limitation.

Impact of Demonetization on Indian Economy

Impact of Demonetization on Indian Economy

Demonetisation and its Impact on Digitisation in India

The purpose of the study is to explore the impact of demonetization on digitization in India. On 8th Nov. 2016, Indian Government announced Demonetization by abolishing INR.500 and INR.1000 currency notes in the country with an objective to move towards a cashless economy besides check on black money and other corrective measures. In the short run, it led to temporary derailment of economy and inconvenience to general public. After initial teething problems like severe cash shortage, there was a steady growth in digital transactions when people have adopted to different digital payment modes like Online / Internet banking, ATM facilities, mobile wallets, usage of debit/credit cards and mobile banking, etc. The authors have taken secondary data from the RBI website from March 2015 to July 2018 to analyze the impact of demonetization on digitization. An event window of 20 months predemonetization and 20 months post-demonetization was taken for analysis. The month the event took place i.e., November 2016 was taken as month ‘0’. Descriptive Statistics, Correlation, t-test, and Trend Analysis were carried out to analyze the data. Based on the results extracted, the authors have concluded that there is a significant increase in the usage of various digital payment methods like RTGS, Retail Electronic Clearing, Prepaid instruments in the post demonetization period with a few exceptions like Paper Clearing, Mobile Banking and Debit cards.

Impact of Demonetisation in Rural Areas Through the Lens of Financial Inclusion

The paper studies the impact of demonetisation that was announced in the year 2016 on the rural population of Kutch district of Gujarat state. Rural areas in India, with about 38 per cent of bank branches in August 2016 (RBI 2017) and 69 per cent of the population (Census 2011), it will be critical to experience demonetisation. In this context, the study examines the hypothesis that the segment of the population which could easily access banking facilities and shift to cashless transaction might have had to bear the lower cost of demonetisation than those who could not. Both supply and demand side of the status of financial inclusion is considered. Although the study did not find any significant difference in the cost of exchange or impact on consumption and income between the inclusive group and excluded group, it implicitly brings out the challenges of financial inclusion in the rural economy.

Cashless economy: The impact of demonetization on small and medium businesses

The Indian economy is heavily reliant on the Small and Medium Enterprise (SME) sector. This industry employs millions and generates 8% of the country's gross domestic product. There must be careful consideration of the possible economic consequences of a big economic action like demonetization. SMEs in India are typically owned by members of the same family. There are two main segments in the SME market. Entrepreneurs that seized the chance and acted rapidly to begin and become successful soon founded profitable businesses. Businesses who entered the market late yet were able to succeed because of the enormous untapped potential. Small and medium-sized businesses (SMEs) believed that they could continue to operate in the same way and yet experience success without needing to expand or make large expenditures.

How did Markets and Public Sentiment React During Demonetization? Study of a Significant Event in the Indian Economy

The present study aims to determine the impact of shock of demonetization which happened in November 2016 in India. It has been observed in literature that while the market moves due to unforeseen events, market movements are largely affected by news reports on such events. Considering these two threads and the association between them, the study follows mixed method research methodology and assesses the impact of demonetization on stock market movement through time series analysis and text analytics of news items generated during the period. This study examines, through time series analysis, the impact of demonetization as an unexpected event on stock market movement. Time series analysis evaluates the impact on overall stock market movements and on sectoral indices, liquidity shocks in the emerging Indian economy due to demonetization. This study integrates time series analysis with robustness tests and follows text analytics, news analytics and sentiment analytics to gauge public sentiment (influenced by media coverage) during the event. These evaluations validate negative movements in the market and most of the sectors due to the negative sentiment of people about demonetization.

Competitive Prices and Asymmetric Cost Behavior for Iraqi Firms: Capacity Utilization as a Moderator

The present study aims to determine the impact of shock of demonetization which happened in November 2016 in India. It has been observed in literature that while the market moves due to unforeseen events, market movements are largely affected by news reports on such events. Considering these two threads and the association between them, the study follows mixed method research methodology and assesses the impact of demonetization on stock market movement through time series analysis and text analytics of news items generated during the period. This study examines, through time series analysis, the impact of demonetization as an unexpected event on stock market movement. Time series analysis evaluates the impact on overall stock market movements and on sectoral indices, liquidity shocks in the emerging Indian economy due to demonetization. This study integrates time series analysis with robustness tests and follows text analytics, news analytics and sentiment analytics to gauge public sentiment (influenced by media coverage) during the event. These evaluations validate negative movements in the market and most of the sectors due to the negative sentiment of people about demonetization.

Effect of consumers' perceived risk on relationship marketing for m-shopping in India: the moderated mediation role of demonetisation

With the development of digital technologies, customers have shifted to various digital platforms for fulfilling their shopping requirements. With demonetisation digital platforms for shopping have been encouraged thus paving the way for m-shoppers to shop at their place of convenience. In spite of all the benefits offered to m-shoppers, they perceive certain risks while shopping through their mobile phones. Therefore, the present study examines the impact of various behavioural constructs like perceived risk, trust, commitment and purchase intention on m-shopping. The data collected with the help of standardised questionnaires was subject to various statistical tools. The findings of the study reveal that perceived risk has an inverse relationship with m-shopping behaviour. The moderated mediation analysis also indicates a positive impact of demonetisation on overall m-shopping behaviour. The study contributes to the m-shopping literature and recommends to the academicians, policymakers and retailers to gauge the quantum of various risks perceived by the customers in m-shopping.

Stock price synchronicity and stock liquidity in an emerging market

This study examines whether the stock price synchronicity (SYNCH) can influence the stock liquidity in an emerging market. The paper also assesses the impact of demonetisation on stock liquidity. This paper applies the fixed effect and random effect panel data methods to estimate the regression model. Further, the article uses the two-step dynamic panel data technique to address the possible endogeneity problem. The paper finds that the stock price synchronicity has a positive and significant association with stock liquidity. It is noticed that the higher the SYNCH, the more is the stock liquidity by using two measures of liquidity. It is also found that stock liquidity is significantly increased post demonetisation. This study attributes this phenomenon to the well-developed online banking system in India. The paper suggests that the regulators should ensure that more firm-specific information is reflected in the stock prices.

Post demonetization impact on economy of India

Demonetization in India will be five years old on November 8, 2021. It was on this day in 2016, at 8 p.m., when Prime Minister Narendra Modi announced that the 500- and 1000-rupee notes - which together constituted 86% of the money in circulation - would no longer be considered legal tender in India. According to its initial stated goals, the policy of demonetization was meant to encourage the use of digital payments. A major promise of demonetisation was that hoarders of cash would be obliged to deposit it in the banks as a result of the currency being demonetized According to the Prime Minister's announcement of the policy, “Which honest person would not be saddened by news of crores of currency notes secreted beneath the mattresses of government officers? Or by stories of money recovered in “gunny sacks””. People who possessed unexplained cash were expected to either disclose it to the tax authorities or get rid of it. Demonstration has been regarded as a “surgical blow” against corruption by many.

Impact of Demonetization and Goods and Services Tax (GST) on India’s Economic Growth: A Critical Review

India’s economic growth has been affected by the sudden withdrawal of currency notes from the circulation and hasty implementation of GST (Goods and Services Tax) in the economy. Demonetization not only pull-down the economic growth but also paralyzing the informal sector and small-scale sector of the economy. The Industrial output cracked and services growth slowdown and eventually the economic growth start declining. Demonetization harm each area of the economy such as the real estate sector, health care industry, the wedding industry and travel industry. On the other hand, the implementation of GST is affecting every sector of the economy and its supply chain too.
 This paper tries to highlight the cost and benefits bear by the economy due to the twin strokes of Demonetization and implementation of the GST. The paper also tries to find out the expected rate of growth of the economy after the Demonetization and GST. Finally, the study tries to conclude that how it would be disrupted and benefits the economy in the long run.

Demonetization Impact on Liquidity of Large Corporates in India

This paper ‘Demonetization Impact on Liquidity of Large Corporates in India’ focuses on the changes in the Liquidity pattern of the companies’ in-order to cope up with the Business Risk that emerged due to the unforeseen Demonetization Policy of the Government of India. The study aimed at finding the performance of various sectors on liquidity parameters during pre and post demonetization period. The study covered the companies listed in NIFTY 50 over the period of 6 years from 2014-2019. The methodology used for analysis is the longitudinal study under descriptive analysis as it involves the repeated observations of the same variables over a period of time. As the paper focuses on the top companies listed, though companies faced the uncertainty during that particular period of demonetization, they bounced back at the earlier than the MSME companies. Some sectors like FMCG, Pharmaceutical were immune to demonetization as it has an inelastic demand in the market and demonetization created giant opportunities for the software sector as the country has been shifted towards digitalization. Found short-term implications for the cash-intensive sectors but in the long run it helps in the growth of the economy, which in turn will have a positive correlation with the growth of companies.

Impact of 2016th-year Demonetization on Banks in India

Demonetization is a monetary step in which a particular series of banknotes render invalid either by the government or by issuing authority of the nation to eliminate the undeclared income. It is a process in which certain units of currency notes will not be remains as legal tender. On November 8, 2016, government demonetize old ? 500 and ?1000 banknotes which were 86% (15.41) trillion in total circulation to curb the black money, wipe off the fake currency, and make a halt in corruption. This move shook all the corners of the economy in which the banking sector was significantly affected. It gave a positive impact on the financial statements of banks, as the deposits were increased, the net earnings of the bank were also increase. Therefore, the study has been conducted to throw the light on the impact of demonetization on banks, primary data have been collected for the of Pre and Post demonetization period.

Impact of Demonetization on Indian Banking Sector

Demonetization refers to the process of stripping of currency unit of its status as legal tender. Demonetization was announced on 8th November, 2016 by the honorable Prime Minister, Mr. Narender Modi with the objective to remove black money, corruption, terrorism and counterfeit notes. Demonetization was a massive step taken by the government of India which had an immense effect on the Indian economy especially on the banking sector as banks forms the core sector of Indian economy. The study aims at finding an insight of impact of demonetization on banking sector, the results indicates demonetization had an initial dip in the short run but in the long run demonetization is going to have a positive impact on the Indian economy in the form of reduced corruption, greater digitalization, tax compliance and better formalization of the Indian economy.

Impact of Demonetization Process on the Performance of Nifty

This paper investigates the impact of demonetization process on the performance of Nifty 50 and its Sectorial Indices. The study uses data of closing prices from 28 June 2016 up to 20 March 2017. The study employs descriptive statistics, paired sample T test and ANOVA to evaluate the impact of demonetization process on the performance of Nifty 50 and its Sectorial Indices. It has found that there is statistical significance at the level of 5% that Nifty 50 dropped after the demonetization event as compared to the pre demonetization event. Further, the results reveal that most of Sectorial Indices of Nifty 50 sloped downward post demonetization event and the significance of the statistical results are varied from one sector to another. It is recommended that periodic review of the policy should be made to iron out the negative impacts of demonetization. Also, it is imperative to evaluate the impact of demonetization on the short, medium, and long run to avoid any grey areas for any future policy regarding cashless economy or demonetization.

Problems Faced by Indian Micro, Small and Medium Enterprises (MSMEs)

MSMEs are of particular significance to the Indian economy. This labour-intensive sector helps to maintain the socio-economic equilibrium. If the regulatory framework facilitates, they can reduce economic disparities at the regional level by employment generation, promoting economic independence, and helping in the sustainable development of the society. Despite a significant contribution to nation-building, MSMEs are not getting the necessary support from government agencies and financial institutions. Inadequate financing, deficient social infrastructure, managerial skills, and sudden shocks caused by economic and tax reforms are the issues that majorly affect the performance of small enterprises at different levels of their operations. Thus, this study has transacted to highlight the problems MSMEs facing in India. Through the quantitative approach, six different families of problems—namely marketing, finance, technology, raw material, labour, and management—have been identified. Each of the problem areas was categorised into internal and external issues. A detailed discussion has been made considering the impact of demonetisation, GST, and skill development programs on MSMEs. Subsequently, some suggestions have been made for improving the performance of MSMEs.

Impact of Demonetization on Employment in India: Issues and Challenges of Labour Market

Demonetization is a conventional practice in monetary policy to embark upon black money. However, it was meant to be suddenly implemented. Long-ago, demonetization has taken place twice but it failed because the idea is to tackle the black money existing in circulation. This wasn’t for tackling corruption that’s what Government is not saying that 100% corruption will be tackled and also if announcement and time would have been given, this step might not have been successful in controlling black money and counterfeit currency in circulation coming from Pakistan, Nepal or other countries. Demonetization is a course of extraction of an exacting form of currency from circulation. The existing form of money has chosen from transmission and retired, to be put back with new notes or coins. The newest demonetization measures taken by the Indian Government on November 8th 2016, in an attempt to hold back corruption and black money has resulted in a massive amount of involuntary consequences. While the key objective following this budge is commendable, the planning and implementation of the scheme left much to be required from a policy point of view. This step has caused rolling impact throughout the economy, departing the most sectors reasonably crippled owing to the unanticipated cash crisis. The labour market in India has been witnessing numerous uncertainties including the problem of world recession, and growing ‘automation’ particularly in the manufacturing sector. More precisely, in the last one and a half decade, India has emerged a global power in terms of the development or diffusion of new technology in the form of ICT. ICT intensity, defined as the ratio of ICT investment to non ICT investment, has increased significantly across industries led to ‘automation’ in most production (and distribution). Its impact on productivity led growth, and direct employment is well documented. However, its negative employment impact, particularly in the ICT using manufacturing sector has largely been ignored. So, in a situation, when the debate, whether the net employment impact of ICT on the economy as a whole is positive, is still un-conclusive; any major policy change like ‘demonetization’ is likely to make the employment scenario further volatile by causing uncertainties to rise in labour market, mainly the informal employment.

AN EXPLORATORY STUDY ON EFFICACY OF DEMONETIZATION IN INDIA: POLICY ROLLOUT ON DEMONETIZING OLD CURRENCY

Demonetization is the process of declining the use of currency from circulation by the government or monetary authorities in a country. This research paper analyses the efficacy of Indian demonetization from common public perspectives, the policy that the government of India has implemented to fight against black money, drying the financial roots of terrorism, and direct the civilization towards digital transactions and a cashless economy. A field survey was conducted in Karnataka and Kerala’s coastal region by distributing a structured questionnaire among the common public to generate the data. The authors run descriptive statistics and ordinal regression analysis to obtain the result for the study’s objectives. The descriptive statistics result found that demonetization increased the number of bank account holders in India. There is not much impact of demonetization on controlling evasion of tax and illegal investments of black money, and the policy adversely affects regular business in the country. The findings from ordinal regression reveal that the time frame was given to the public to demonetize their old notes were sufficient; money circulation was well planned at the time of demonetization. The policy implemented at the right time and the common public, despite facing enormous challenges while purchasing goods and services at the time of demonetization, considers that demonetization implementation was effective.
 JEL Classification Codes: E5, E6, E7, E58, E60.

How macroeconomic shocks impact employment: comparison of Gujarat with states in Western India.

In this paper, we discuss the impact of the macroeconomic shock of demonetisation on employment in the five Western states of Gujarat, Maharashtra, Rajasthan, Chhattisgarh and Madhya Pradesh. We analyse the impact of the macroeconomic shocks on workforce participation rates (WPR) in the states. We do this separately for overall and separately for men and women. We use the Center for Monitoring the Indian Economy’s (CMIE) Consumer Pyramids Household Survey (CPHS), which allows us to look at monthly workforce participation rates of men and women in the age group of 15–64 years for the period from January 2014 to December 2019. Overall, the trendline structural break figures of the shock of demonetisation were corroborated by the regression results. Demonetisation had a significant negative impact on WPR of all workers in Maharashtra, Madhya Pradesh and Chhattisgarh and on male WPR in Maharashtra, Madhya Pradesh and Rajasthan. A significant negative impact of demonetisation on women’s WPR was corroborated by the regression equations for Chhattisgarh and Madhya Pradesh. Employment for all, males and females in Gujarat was not significantly affected by the shock of demonetisation. It appeared that workers in Gujarat were better able to negotiate the shock.