1Research Scholar, Department of Management, Jamia Hamdard University, New Delhi, Email: kanishkasethi20@gmail.com
2Assistant Professor (Finance), Department of Management, Jamia Hamdard University, New Delhi, Email: matloobullah.khan@gmail.com
*(Corresponding Author); Professor, Department of Management, Jamia Hamdard University, New Delhi, Email: drreshmanasreen@yahoo.com
Online published on 24 September, 2020.
The Microfinance sector has been claimed to be one of the worst hit sectors of the event of currency Demonetization. Thus, a study has been conducted to measure the impact of Demonetization on the financial performance of the Micro Finance Institutions (MFIs) in India pre and post the occurrence of the event. For the present study, the data on 71 Microfinance Institutions operating all over India has been acquired from the Microfinance Information Exchange (MIX) secondary source database. The performance of the institutions has been based on the 18 financial performance indicators obtained from the extant literature review undertaken. The indicators have been further categorized into Outreach, Credit Performance, Efficiency & Productivity, Earnings, Profitability, and Leverage. Successive categories of each of the six variables mentioned-above helped frame a suitable Performance Evaluation model for the MFIs and tested for paired sample t-test to conclude that the impact of Demonetization had been negative for both the institutions and their clients in the short run. A mathematical equation modelling has also been formulated to predict the impact of Currency Demonetization on the Individual Financial Performance Indicators. Currently, the situation has found to be improved, and most of the sector is back to the previous Demonetization levels.
Demonetization, Financial performance, Microfinance, Microfinance information exchange, Outreach, Profitability and sustainability
