Improving the System of Indicators and Criteria for Assessing the Economic Security of Banks in Uzbekistan

Supervisory frameworks that evaluate bank economic security through isolated prudential ratios offer an incomplete picture of institutional vulnerability - a limitation felt acutely in rapidly developing banking systems. This study constructs and empirically tests an enhanced indicator framework for the Uzbek banking sector, benchmarked against Basel III standards and International Monetary Fund’s Financial Soundness Indicators. Three analytical approaches are employed: a gap analysis comparing the Central Bank of Uzbekistan supervisory architecture with international requirements; the development of a Composite Economic Security Index that aggregates five risk dimensions through a weighted normalization procedure; and a zone-based classification system supporting regulatory interpretation. Applied to sector-level data through January 2026, the Composite Economic Security Index registers 59.6 points, placing the banking system in the green zone and indicating a satisfactory level of economic security. Capital adequacy and liquidity emerge as the strongest dimensions: the Capital Adequacy Ratio stands at 18.34% and the Liquidity Coverage Ratio at 207.5%, both markedly above regulatory minimums. Asset quality has improved considerably, with the non-performing loan ratio declining to 2.99% - its lowest level across the study period. The gap analysis nonetheless identifies three structural deficiencies in the current supervisory architecture: the NPL intervention threshold remains fixed at 5%, above the 3.0-3.5% range increasingly favoured in comparable jurisdictions; no formal composite monitoring index exists within the Central Bank of Uzbekistan toolkit; and benchmark values for the Loan-to-Deposit ratio, provision coverage ratio, and net interest margin are absent from the regulatory framework. The study concludes with targeted policy recommendations addressing each identified gap, and offers a replicable, data-driven instrument for integrated bank supervision in emerging-market contexts.