THE IMPACT OF COMMERCIAL BANK LIABILITIES ON FINANCIAL EFFICIENCY IN UZBEKISTAN THROUGH FUNDING STRUCTURE LIQUIDITY AND INTEREST RATE RISK

Abstract

This paper examines liability-management theory — the deposit-stability, purchased-funds and liquidity-matching ("golden rule") tradition, together with the Basel III liquidity standards — as a framework for explaining and improving the economic effi ciency with which Uzbekistan's commercial banks manage their resource base. Using offi cial Central Bank of Uzbekistan (CBU) data for fi ve verifi able reference dates spanning November 2021 to June 2026, a composite Liability Management Effi ciency Index is constructed from three objectively weighted indicators — deposit volume, total liabilities, and the deposit-to-liabilities ratio — using coeffi cient-of-variation weighting. The index rises from 0.417 (November 2021, "Medium" tier) to 0.862 (November 2025, "High" tier) and reaches 0.921 by January 2026, refl ecting a near doubling of sector liabilities (from UZS 352.6 trillion to UZS 838.8 trillion) accompanied by a still faster expansion of deposits (from UZS 141.0 trillion to UZS 460.6 trillion). A complementary bank-level analysis of the fi ve largest, majority stateowned banks (2022–2025) shows individual deposit-to-liability ratios rising from a 24–39 percent range to 30–57 percent, while these fi ve banks alone still account for an estimated 52.8 percent of sector liabilities and 39.8 percent of sector deposits as of November 2025 — a concentration comparable in scale to the ownership dominance documented for other transition-economy banking systems. The fi ndings support the liability-management proposition that a bank's resource base can be actively and measurably improved, but also show that structural concentration among a handful of state-linked banks remains a distinct effi ciency and competition concern that deposit-growth trends alone do not resolve. Policy recommendations are off ered for deposit-stability methodology, maturity matching, interbank funding-cost management, and continued diversifi cation of the ownership structure of bank liabilities.