Enhancing the Practice of Lending to the Real Sector by Commercial Banks: Evidence and Improvement Pathways from Uzbekistan (American Journal of Economics and Business Management)

Summary

• The total bank loan portfolio in Uzbekistan exceeded 604 trillion soums at the end of 2025, but the credit-to-GDP ratio declined from 37.4% in 2022 to 32.7% in 2025.p.1
• Between 1 July 2025 and 1 July 2026, the total portfolio expanded by 11.7%, whereas outstanding loans to six real-sector categories grew by only 1.4%.p.1
• The share of real-sector lending in the total credit portfolio fell from 53.6% on 1 July 2025 to 48.6% on 1 July 2026.p.1
• The log-linear elasticity of bank credit relative to nominal GDP was estimated at 0.81 for 2021–2025, indicating that credit growth lagged nominal economic growth.p.1
• Although the system-wide non-performing loan ratio declined from 4.0% to 3.0% during 2025, business loans in soums carried average commercial interest rates of 22–23%.p.1

Key insights

1. Log-linear regression estimates indicate an elasticity of bank credit with respect to nominal GDP of 0.806, significantly below unit elasticity.p.5
2. Outstanding bank loans to industry contracted by 20.0 trillion soums between 1 July 2025 and 1 July 2026.p.6
3. The average real commercial cost of borrowing for businesses stood at approximately 14% in early 2026, exceeding real GDP growth of 7.7%.p.6
4. State-owned banks accounted for 67.5% of total commercial bank lending in Uzbekistan as of December 2025.p.1
5. System-wide non-performing loans dropped to 3.0% at year-end 2025, though state-owned business lenders reported higher rates up to 5.7%.p.6