Publication Details
Abstract
Commercial banks are tag repositories of economic development as they help the financial resources to migrate from one sector to another, a process that impact on financial stability. Banks are widely affected by numerous variables, one of the indicators is income from interest and non-interest. These factors have been proven to play an essential role in the long-term health of banks. Allocating balance sheet indicators into the corresponding five category groups is not a researched question, as the literature analysis have shown. However, this is rather contrasted situation to already existing researches that each of them tries to find the specific relations between balance sheet indicators and financial stability of Uzbek commercial banks due to the fact that most of the researches are rather focused on privatization process and on financial crises. The purpose of this research is to examine the impact of core balance sheet indicators, namely, undistributed profit, interest income and non-interest income on the financial safety of commercial banks in the Republic of Uzbekistan. The balance sheet variables captured customer liabilities on financial instruments and Funds to be paid to the Central Bank which were found to play large roles in affectation of undistributed profit and income generation. CDC) Multicollinearity tests and stationarity checks also validated the reliability of the utilized model. Our findings make three noteworthy contributions to the literature of the Uzbek banking sector, as we: (i) provide a new conceptual model based on balance sheet-based metrics linked to financial stability, (ii) present novel time-series raw data illustrating trends in balance sheet metrics which are then further hypothesised and analysed using graphical analysis and (iii) offer a data-driven, level of detail in the relationship between balance sheet metrics and financial stability in the context of the Uzbek banking sector. The results are useful for policy-maker and financial manager as it believe that bank income could be optimize through proper strategies as well as to keep the banking stability in the future.