Assessing the impact of demonetization of 2016 on the Indian economy: An exploratory study

Vashishat, Tarun; Tyagi, Vikas

doi:10.5958/2249-7307.2017.00103.7

Cited by 1 publication

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“…This decision failed to achieve its aim of resolving the inflated and debt-ridden economy (Miyan, 2017 ). In 1987, Myanmar announced the demonetization of nearly 80% of the money in circulation to limit the black economy which led to the government crackdown the following year (Vashishat & Tyagi, 2017 ). In order to counter the parallel economy, the Soviet Union under the leadership of Mikhail Gorbachev removed 100 and 50-ruble currency notes from the market in 1991 which subsequently affected the economy of Soviet republics such as Kazakhstan and Ukraine (Dharanipriya & Karthikeyan, 2020 ).…”

Section: Introductionmentioning

confidence: 99%

Impact of India’s Demonetization Episode on its Equity Markets

Sutar¹,

Dhalmahapatra²,

Chakraborty³

2022

Asia-Pac Financ Markets

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Demonetization is an act of divesting a currency unit from its legal tender. In a developing country, the act of demonetization will have a direct influence on various sectors. An event study is an empirical analysis to investigate the effect of such unforeseen events. In this study, we investigate the impact of demonetization on the Indian stock market. For the analysis, daily data from the NIFTY 50 Index during demonetization have been analyzed within the observation of different event windows. These event windows are framed as 0–7 days, 0–14 days, and 0–30 days to understand the impact of demonetization during the analysis period 8th November 2016–21st December 2016. The study concludes that the impact of events on the Indian stock market lasted for a short time-period and the market recovered within 1 month. More precisely, in the case of demonetization, though the stock market initially viewed the event as disruptive, Cumulative Abnormal Returns bounce back to indicate that the negative financial impact was not as severe as the industry perceived.

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Section: Introductionmentioning

confidence: 99%