The impact of economic policy on non-performing loans: the case of Uzbekistan

This study investigates the impact of economic policy variables on non-performing loans (NPLs) in Uzbekistan’s
banking sector using panel data regression analysis. The empirical results reveal that a tighter monetary policy and
stronger financial supervision significantly reduce NPLs, while expansionary fiscal policy, exchange rate volatility, and
high credit-to-deposit ratios contribute to their increase. Additionally, macroeconomic stability indicators such as GDP
growth and bank-specific factors like return on assets (ROA) and bank size are found to play a crucial role in determining
NPL dynamics. These findings suggest that coordinated macroeconomic and regulatory policies are essential for ensuring
financial stability and improving credit quality in the banking sector. Policy recommendations emphasize the need for
prudent monetary and fiscal policies, enhanced risk management, and stronger supervisory frameworks to mitigate credit
risks and support sustainable financial development in Uzbekistan