IMPROVING LENDING MECHANISMS FOR SMALL BUSINESS ENTITIES: EVIDENCE FROM UZBEKISTAN AND LESSONS FROM INTERNATIONAL PRACTICE

Abstract

Small businesses generate more than half of Uzbekistan’s gross domestic product, yet bank credit remains a marginal source of their investment finance. This paper examines the current architecture of small business lending in Uzbekistan and identifies the institutional and financial constraints that limit its effectiveness. Drawing on official statistics for 2025–2026, the analysis shows that excessive collateral requirements, deteriorating loan quality and the low reliability of financial reporting are mutually reinforcing manifestations of a single underlying problem — information asymmetry between banks and borrowers. The paper then reviews international practice in the United States, the European Union and Asia, focusing on automated credit scoring, machine-learning risk assessment and public credit guarantee schemes. On this basis, five practical proposals are formulated: end-to-end digitalisation of the lending process, scoring based on alternative data, a line of collateral-free credit products, a transition to portfolio credit guarantees, and the development of a movable collateral registry combined with incentives for transparent reporting.