Financial Inclusion, Regulation, and Literacy in Uzbekistan

Figure 3: Weighted Average Interest Rates on Loans as of May 2018

Source: Central Bank of Uzbekistan.
Note that Findex 2017 asked about the reasons for not having a bank account, which is different from Findex 2014, which asked about the reasons for not using financial services in general. Therefore, columns (a) and (b) in Table 14 are not comparable. A lack of money to use an account, a lack of documentation, the long distance to a bank branch, and the high cost of using a bank account are the major reasons for not using formal finance.
Table 15 describes the top reasons for firms not using bank loans/line of credit. They ranked high interest rates and complex application procedures as the two major reasons for not applying for a formal loan/line of credit. The cost of borrowing from a financial institution increased between 2008 and 2013. Indeed, Blondel (2015), based on a field study in Uzbekistan, also reported that entrepreneurs declared that the paperwork needed to obtain a loan was among the most difficult.

Table 15: Top Reasons for Not Using Bank Loans/Lines of Credit

	2008	2013
High interest rates	0.24	0.42
Complex application process	0.37	0.33
High collateral requirements	0.18	0.22
Insufficient loan size and maturity	0.11	0.03
Won’t be approved	0.08	0.00

Source: Enterprise surveys.
The third-largest group, containing 22% of firms, reported high collateral requirements as the major reason behind their decision not to use formal finance. Blondel (2015) stated, for the sample of firms that her study covered, that the collateral values ranged from 130% to 500% of the loan values, with a median of 175%.