Influence of Internal Factors on The Capital Stability of Commercial Banks - SVAR Approach, Case of Uzbekistan

This study examines the influence of internal factors on the capital stability of commercial banks in Uzbekistan using a Structural Vector Autoregression (SVAR) framework. The research focuses on the dynamic relationship between the Capital Adequacy Ratio (CAR) and five key bank-specific variables: asset size, loan portfolio growth, high-quality liquid assets, net profit, and return on assets. The analysis is based on quarterly banking sector data for 2018–2024, transformed into monthly observations to capture short- and medium-term dynamics more effectively. The empirical findings show that loan portfolio growth is the main internal determinant of capital adequacy, explaining the largest share of CAR fluctuations. Its effect is positive in the short run but becomes negative over the medium term as credit risk materializes. ROA emerges as the second most important factor, while HQLA gains significance with a lag, indicating the increasing importance of liquidity management for capital stability. Asset growth and net profit have relatively weaker direct effects. The results suggest that capital stability in Uzbekistan’s banking sector is strongly linked to credit expansion, profitability, and liquidity structure.