Financial Inclusion, Regulation, and Literacy in Uzbekistan

1.1Financial Inclusion of Micro, Small, Medium-Sized, and Large Enterprises

Table 13 shows the overall increase in the percentage of firms with a bank account: 97.3% of firms declared that they had a bank account in 2013 versus 93.8 in 2008. Bank account ownership is almost universal, independent of the industry, enterprise size, business location, and gender of the business manager.
In 2013, 26.4% of firms declared that they had a bank loan or line of credit versus only 10.5% in 2008; thus, financial inclusion has doubled, but it is still low compared with countries with a similar GDP level (see Table 13). As Table 13 shows, the gaps in having loans/lines of credit are significant depending on the establishment size, business location, and exporter status. The proportion of firms is smaller for small firms, firms located in the capital city, and non-exporters. Strikingly, the proportion of firms with a line of credit/loan is independent of the gender of the top manager. Despite these changes, the proportion of businesses that declared that they needed no loan has also doubled. The collateral requirements remain high, as the high percentage of loans that require collateral and the value of collateral evidence. Women-managed businesses have to give a higher value of collateral than men-managed businesses.

2.BARRIERS TO FINANCIAL INCLUSION

Column (a) of Table 14 presents the major reasons for not using formal financial services in Uzbekistan. The high costs of financial services are reported as the top reason for households not using formal finance in 2014. Indeed, as Figure 3 shows, the interest rates on commercial loans for individuals (panel a) and businesses (panels b and c) are high given that the ADB has published figures of 16% inflation and 4% GDP per capita growth. Blondel (2015) mentioned that the government policy to restrict access to cash and cash transactions translated into additional informal transaction costs that entrepreneurs had to pay to cash their bank loans in 2015.