Demonetization and Its Determinants in the Financial Markets of Ethiopia: An Economic Policy Analysis

The main objective of this study is to identify the determinants of implementing demonetization in micro and small-scale enterprises in Ethiopian in case of Addis Ababa city. To achieve this objective, this study employed explanatory research design and data was collected from across the population at one point in time. The researcher used primary sources of data which was collected via questionnaire. The descriptive and econometric data analysis, particularly the logistic regression analysis was used to test the relationship between explanatory and the dependent variables. The researcher selected a sample of 315 respondents using Stratified sampling method, The logistic regression result indicated that management factors, financial factors, political-legal factors, marketing factors, and technological factors have a significant and positive effect on the implementation of demonetization in Lideta sub city of Addis Ababa City. Finally, based on the findings of a study, the researcher suggests that all concerned bodies such as financial institutions, the media, government bodies and Micro and small enterprise owners should work toward expanding the means for to demonetization, since it has functions such as cost and time to save, increase sales volume, boost government tax collection, reduce illegal activities and black money prevalence, encourage technological advancements which contributes for the country’s economic growth as a whole. Creating awareness concerning currency demonetization and encouraging and increasing the usage of demonetization instruments, then the simple way that society is going to use is a digitalization.