Analysis of the Level of Competition in the Banking System of Uzbekistan

Abstract

The banking system plays a pivotal role in the economic development of Uzbekistan, serving as a key facilitator of financial intermediation and resource allocation. In this study, we aim to analyze the level of competition within the Uzbekistani banking sector to understand its implications for market efficiency and consumer welfare. Utilizing a combination of quantitative data from financial reports, regulatory filings, and market surveys, we employ established metrics such as the Herfindahl-Hirschman Index (HHI) to measure market concentration and assess the competitive landscape. The banking sector helps with money management and growth. Changes in global finance make it important to understand how banking affects economic development. Uzbekistan's banking system has changed a lot as the country has moved toward a market-based economy. Now, it includes different types of banks, like government ones, private banks, and foreign banks.

The authors gathered information from reliable sources like the Central Bank of Uzbekistan, as well as big international organizations like the World Bank and the International Monetary Fund. The study found that Uzbekistan's banking sector is growing steadily, with more banks opening up and offering a wider range of services.

The analysis revealed that Uzbekistan's banking sector has shown a steady growth trend from 2016 to 2023. This period marks a significant increase in the number of banking units, reflecting the evolving financial landscape of the country. The market shares of individual banks vary significantly, with some larger banks holding substantial market shares while smaller banks have more limited market presence. Moreover, the Herfindahl-Hirschman Index (HHI) values for all key banking indicators have remained below 1500 over the four years, indicating a high level of competition in the sector.