A Detailed Study on the Importance of Microfinance on the Banks in Uzbekistan

Abstract

This research work investigated the Importance of Microfinance on the Banks in Uzbekistan. The study examined how micro-finance activities and features such as group membership, pre-loan training, cross guarantee ship, loan size, technical and managerial training, among others, impact on the survival, growth, productivity and performance of Micro finance in Uzbekistan. The hypotheses formulated were developed around the theories of financial growth model, pecking order theory, and contract theory. Four hypotheses were raised and tested at 0.05 significant levels. The findings revealed that micro finance and micro-financing enhance survival of Micro finance but not sufficient for growth and expansion of such Micro finance. The result also revealed that microfinance has positive effects on productivity and performance of local entrepreneurs. The findings from the  interview sessions revealed that micro financing is not effective and substantially being practiced in Uzbekistan as many  grant more individual loans than group based loans, thereby increasing their running cost and putting their portfolio at risk. We also recommend that enterprises supported by MFBs should be linked up with larger financing window like the fund or Strategic Partners for expansion and growth funding after survival.

DOI: 10.7176/RJFA/12-20-02

Publication date:October 31^st 2021