The impact of demonetization on Indian firms’ performance: does company’s age make a difference?


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The main aim of this paper is to evaluate the impact of demonetization on Indian firm’s quarterly financial performance before and after demonetization period (March-December, 2017), and to find out if companies’ age helps to face financial disruption. Four variables, which are net sales, total income, net profit after tax, and earnings per share, were taken as proxies for analyzing the quarterly financial performance of 2,892 companies listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Calcutta Stock Exchange (CSE). Nonparametric test, particularly Wilcoxon Matched-Pairs Signed Rank Test and Kruskal-Wallis one-way analysis of variance, were applied in analyzing the data. Results reveal that there is a statistically significant difference between the financial performance before and after demonetization at 5% level of significance. It was also found that the decrease/increase in the financial performance of all the firms was affected by the demonetization process, irrespective of their ages. The findings could be useful for financial managers and financial consultants, as they would be able to focus on the issues that matter most at the time of financial disruption.

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    • Figure 1. Summary of study selection process
    • Table 1. Summary of empirical studies on demonetization – performance nexus
    • Table 2. Variables’ definition
    • Table 3. Actual quarterly GDP
    • Table 4. Descriptive statistics
    • Table 5. Wilcoxon test
    • Table 6. Kruskal-Wallis test