Impacts of Demonetization on Indian Banking Sector Stocks: An Empirical Study.

In order to examine the market reaction, specifically the banking sector stocks, to demonetization, with a sample of eight banks using the standard event study methodology, the hypothesis that abnormal returns on and around demonetization are less than or equal to zero has been tested. The empirical results infer that the average abnormal returns and the cumulative average abnormal returns are positive and significant around the demonetization date, thus, rejecting the null hypothesis. The study indicates positive impacts of demonetization on the banking sector stocks.