Dynamics of the Loan-to-Deposit Ratio and Efficiency Analysis of Commercial Banks in Uzbekistan

  • Sherzod Khannaev Tashkent International University
Keywords: loan-to-deposit ratio, liquidity, commercial banks, cluster analysis, financial stability

Abstract

We use loan-deposit ratios (LDR), which is one of the most commonly used metrics for measuring liquidity and efficiency in banking, and essentially indicates the extent to which a bank is able to convert deposits into loans. Recent changes in the banking system of Uzbekistan, caused by changes in state banks and the entry of foreign banks have changed LDR (especially during pandemic years (2020–2023)). Though LDR is significant in the demand of liquidity and financial stability, however, there is a lack of empirical researches about trends of LDR, differences of LDR by ownership and systemic implications of bank LDR in the banking sector of Uzbekistan. This study investigates the determinants of LDR of commercial banks of Uzbekistan, explores ownership-specific differences, and applies statistical and clustering techniques to reveal commonalities beyond institutional types. The mean LDR was 174% suggesting that the banks depended on state and non-domestics resources instead of deposits, state-controlled banks have a greater LDR (higher than 258%) as opposed to with private banks (at about 130%), according to the descriptive statistic. ANOVA confirms statistically significant differences in LDR by ownership forms, except between private banks and foreign banks. Cluster analyses revealed three clusters: foreign banks grouped together and achieved mostly very high ratios; state banks were grouped together with medium spans; and private banks were grouped together with low spans. The originality of this study is to be the first basis systematic, multi-method study of LDR in Uzbekistan, describing, inferring and clustering LDR, revealing ownership based and structural differences. The results show how much state banks rely on outside resources, that private banks are stable, and that foreign ones are subject to fluctuations, providing policymakers with data-driven evidence that they can turn to when drafting rules for liquidity regulation, and banking reforms.

References

1. A. Saunders and M. M. Cornett, Financial Institutions Management: A Risk Management Approach. New York, NY, USA: McGraw-Hill/Irwin, 2008. [Online]. Available: https://www.mheducation.com/highered/product/financial-institutions-management-risk-management-approach-saunders-cornett/M9780073403851.html
2. A. Demirgüç-Kunt and H. Huizinga, “Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence,” The World Bank Economic Review, vol. 13, no. 2, pp. 379–408, 1999, doi: https://doi.org/10.1093/wber/13.2.379.
3. C. Borio and P. Lowe, “Assessing the Risk of Banking Crises,” BIS Quarterly Review, pp. 43–54, Dec. 2002. [Online]. Available: https://www.bis.org/publ/r_qt0212e.pdf
4. A. F. Aysan and S. P. Ceyhan, “What Determines the Banking Sector Performance in Globalized Financial Markets? The Case of Turkey,” Physica A: Statistical Mechanics and its Applications, vol. 387, no. 7, pp. 1593–1602, 2008, doi: https://doi.org/10.1016/j.physa.2007.11.042.
5. O. Isakov, “Impact of Loan to Deposit Ratio on the Performance of Commercial Banks in Uzbekistan,” Economics and Innovative Technologies, vol. 11, no. 1, pp. 45–52, 2023.
6. O. Isakov, “Factors affecting non-performing loans: Empirical evidence from commercial banks in Uzbekistan,” Journal of Economics and Financial Analysis, vol. 8, no. 2, pp. 1–21, 2024.
7. M. Attanazarova, “Evaluating Credit Resource Formation and Utilization in Uzbekistan's Banking Sector: An Analytical Approach,” Journal of Applied Science and Social Science, vol. 1, no. 3, pp. 579–587, 2025.
8. О. Исаков, “Does interest rate affect non-performing loans? Empirical evidence from commercial banks in Uzbekistan,” Перспективы реформирования и устойчивого развития народного хозяйства, vol. 1, no. 1, pp. 216–219, 2024.
9. E. N. Sobirovna, “Sources of Increasing the Investment and Credit Potential of Commercial Banks,” Asia Pacific Journal of Marketing & Management Review, vol. 14, no. 06, pp. 54–61, 2025.
10. I. O. Kuchkarovich, “Does Foreign Ownership Improve the Credit Risk Management?,” unpublished.
11. Y. Pulatov and B. Islamov, “Corporate Governance and Bank Profitability: A Fixed Effects Regression Analysis of State-Owned Banks in Uzbekistan,” Scientific Journal of Actuarial Finance and Accounting, vol. 5, no. 2, pp. 142–150, 2025.
12. S. Yuldasheva, “Evaluation of a Commercial Bank's Competitive Strategy,” Economics and Innovative Technologies, vol. 11, no. 5, pp. 13–21, 2023.
13. O. K. Isakov, “Does Foreign Ownership Improve the Credit Risk Management?,” International Scientific Journal Management, Marketing and Finance, vol. 1, no. 4, pp. 221–229, 2025.
14. M. Ayaz, M. Yusif, and J. Joshgun, “Role of the Banking Sector in Sustainable Economic Development–The Case of Azerbaijan,” Dunakavics, vol. 12, no. 8, pp. 15–28, 2024.
15. M. Bakhtiyarovna Mominova, “Improving the Innovative Methods of Managing Active Operations of a Commercial Bank,” in Proc. 5th Int. Conf. Future Networks and Distributed Systems, 2021, pp. 370–377.
Published
2025-09-26
How to Cite
Khannaev, S. (2025). Dynamics of the Loan-to-Deposit Ratio and Efficiency Analysis of Commercial Banks in Uzbekistan. Central Asian Journal of Innovations on Tourism Management and Finance, 6(4), 1577-1584. Retrieved from https://cajitmf.casjournal.org/index.php/CAJITMF/article/view/1035
Issue
Vol. 6 No. 4 (2025): October
Section
Articles

In submitting the manuscript to the Central Asian Journal of Innovations on Tourism Management and Finance, the authors certify that:

  • They are authorized by their co-authors to enter into these arrangements.
  • The work described has not been formally published before, except in the form of an abstract or as part of a published lecture, review, thesis, or overlay journal.
  • That it is not under consideration for publication elsewhere,
  • The publication has been approved by the author(s) and by responsible authorities – tacitly or explicitly – of the institutes where the work has been carried out.
  • They secure the right to reproduce any material that has already been published or copyrighted elsewhere.
  • They agree to the following license and copyright agreement.

License and Copyright Agreement

Authors who publish with Central Asian Journal of Innovations on Tourism Management and Finance agree to the following terms:

  1. Authors retain copyright and grant the Central Asian Journal of Innovations on Tourism Management and Finance right of first publication with the work simultaneously licensed under Creative Commons Attribution License (CC BY 4.0) that allows others to share the work with an acknowledgment of the work's authorship and initial publication in this journal.
  2. Authors can enter into separate, additional contractual arrangements for the non-exclusive distribution of the Central Asian Journal of Innovations on Tourism Management and Finance published version of the work (e.g., post it to an institutional repository or edit it in a book), with an acknowledgment of its initial publication in this journal.
  3. Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) before and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.