1. Microfinance institutions
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.
2. Impact Over Banking
The term “demonetization” is an instrument to shrink Inflation, Black Money, Corruption and terror funding, this step discourages a cash dependent economy in India. Government of India drive towards demonetization has given a strong push to the popularity of digital banking and made helps with the alternative arrangements of e-banking and “e-wallet” to trade and commerce.
3. Diffusion of mobile payment
The purpose of this study is to explore the antecedents of the behavioural intention and adoption of mobile payment services like m-wallets and m-banking by users in India. This is done by examining the diffusion of mobile payment technology within an extended framework of the Unified Theory of Acceptance and Use of Technology (UTAUT) model. The study attempts to extend the UTAUT model further by introducing three more constructs, namely- perceived cost, perceived risk and demonetization effect and analyses the impact of demonetization Age acts as a moderating variable consistently across three models, implying that younger users give more importance to effortless interface of mobile payment services and get more influenced by peers and society that shapes their intention to use mobile payment services.
4. Demonetization on Shareholders’ Wealth
It is documented that this announcement had various effects on individual, social, and economic levels. The data of shareholders’ returns from before and after demonetization for 60 months from October 2012 to November 2017 were collected using a capital line database. The results depict that demonetization ruined shareholders’ wealth for 12 months. However, in the long run it gives investors very attractive returns.
5. Domestic Agricultural Markets
This paper estimates the impact on domestic trade in agricultural commodities of India’s demonetization exercise that invalidated 86% of the currency in circulation. Using data on arrivals and prices from close to 3000 regulated markets in India for 35 major agricultural commodities for the period 2011-2017, the focus is on short term effects up to 3 months after demonetization, tracking both the impact and recovery. These 35 commodities account for an overwhelming share of land under cultivation and value of production and hence are representative of Indian agriculture in more than one sense.
6. Indian Stock Market
The article intends to investigate the impact of demonetization on the Bombay Stock Exchange (BSE). An event study methodology has been used to analyse the impact of the announcement on its most important index “S&P” (Standard & Poor) BSE SENSEX index and the 30 top trading stocks which comprise S&P BSE SENSEX. The study period is divided into pre- and post-demonetization announcement. The empirical results indicate that there was no striking impact of the demonetization announcement on the stock returns during the period of the study.
7. E-Commerce in Indian Economy
Demonetization aims at pushing consumers towards making digital payments, thereby contributing to a cashless economy. Niti Aayog published a report on the growth of digital payments in India post-demonetization. Despite bringing chaos in its initial days, demonetization in the long run is considered beneficial to the growth of e-commerce in India. One of the long-term benefits for the ecommerce industry is reduction in payments via Cash on delivery (COD). More companies now try to entice consumers directly online, using tools such as digital coupons, social media marketing and targeted advertisements.
8. Consumer payment choice and the heterogeneous impact
Consumer payment choice is based on heterogeneous preferences. We analyse India’s sudden demonetization of 86% of the cash in circulation with new notes gradually being replaced over the next several months. The welfare cost of the liquidity shock was equivalent to 1% of consumption owing to the slow remonetisation process. Even though all consumers experienced a decline in welfare, its extent varied depending on the degree of cash dependence and the ability to switch to non-cash payments.
9. Startup Industries in India
Startup is usually an enterprise such as a partnership, private limited company or an organization purposely designed for the rapid development of a potentially viable entrepreneurial venture. startup companies exploit technologies such as telecommunications, e-commerce, Internet, computers or robotics in a more innovative and out of the box processes of the development, validation and research for target markets. Government has taken lot of initiative to boost Startups through various supportive schemes such as Make in India, Stand up India, Pradhan Mantri Kaushal Vikas Yojna, Mudra Yojna, etc. The Banking sector has to play significant role in mounting their reach for facilitating sustainable growth in Startup sector.
10. Liquidity of Large Corporates in India
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.
11. Conclusion
In long run, there are some positive and some negative impact of demonetization but negative impact does not outweigh the positive impact of it. After the demonetization some sectors not affected like Pharma, FMCG, Education, Agriculture, Hospitals, Energy and Telecommunication From an equity market perspective, this move would be positive for Banking and Infrastructure sector in the medium to long term.
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