Collateral Assessment in Crediting by Banks. Evidence from Uzbekistan

Abstract

At present one of the common means to attract funds in business is to get loan from commercial banks. Obviously, in most countries interest on debt capital is tax deductible. Therefore, debt capital cost lower than equity in some cases. But, in order to prevent the risk, banks also give credits under certain conditions. In the first decade of 20^th century, the first stage of crediting was easier than now in Uzbekistan. Thus, banks had some difficulties with getting their funds back, because some enterprises went bankrupt because of financial crisis and the market value of the collateral was not enough to cover the debt. Taking all of those situations into considerations, banks are paying a great attention to the collateral assessment. Nevertheless, there are still some problems that need solutions.  This paper studies the current state of collateral assessment in Uzbekistan and gives some recommendations and proposals to improve it.

Keywords: Collateral, assessment, bank loan, estimation institution, Uzbekistan