Publication Details
Abstract
This study investigates the dynamic relationship between bank lending and entrepreneurial activity in Uzbekistan using a Structural Vector Autoregression (SVAR) approach based on quarterly data spanning from 2015 to 2024. The research examines how changes in loan volume, lending interest rates, and money market conditions jointly influence GDP growth and the broader entrepreneurial ecosystem. The theoretical framework maps the arc of banking business models — from traditional deposit-and-loan intermediation to customer-centric, digital, hybrid and specialized models — and constructs a conceptual foundation for assessing their macroeconomic effects. It is established that bank loan play a crucial role in stimulating growth in the real sector via investment channel. A positive shock to loan volume produces a significant and persistent increase in GDP in subsequent quarters, giving rise to a long-term loan multiplier that highlights the strategic relevance of having access to loans for entrepreneurs to invest. Conversely, rising lending rates are found to exert a considerably stronger dampening effect on economic output in the long run than in the short run, highlighting the economy's high sensitivity to the cost of borrowing. The monetary transmission analysis reveals that the money market rate is the dominant determinant of commercial lending rates, indicating that central bank interventions are highly effective in shaping loan conditions. The findings suggest that sustainable entrepreneurial development in Uzbekistan requires a coordinated policy approach encompassing interest rate stability, expanded SME financing mechanisms, the adoption of alternative loan scoring methods, and the integration of digital technologies into banking business models.