Publication Details
Abstract
This paper examines international experience in raising the operating and financial efficiency of commercial banks under conditions of systemic transformation, and derives analytical lessons applicable to the ongoing reform of Uzbekistan’s banking sector. Using a comparative-institutional design combined with a qualitative meta-synthesis of empirical efficiency studies (DEA and SFA based) and descriptive cross-country statistical analysis for the period 2000–2025, the study compares four distinct transformation trajectories: (i) the privatisation-and-foreign-entry model of Central and Eastern Europe (Poland, the Czech Republic, Estonia, Hungary); (ii) the gradual, state-led recapitalisation-and-listing model of China; (iii) the crisis-driven restructuring model of the Republic of Korea and Türkiye; and (iv) the consolidation-and-partial-privatisation model of the Commonwealth of Independent States (Kazakhstan, Georgia, Armenia). The analysis shows that ownership transformation alone is a necessary but insufficient condition for efficiency gains: measurable improvement in cost efficiency, the cost-to-income ratio and returns on assets emerges only where privatisation is accompanied by (a) credible balance-sheet cleaning through a specialised asset-management mechanism, (b) hard budget constraints on directed lending, (c) genuine board-level corporate governance reform, and (d) a subsequent wave of technological transformation. Meta-synthesis of the reviewed literature indicates that foreign-owned and privatised domestic banks in transition economies operate, on average, 8–15 percentage points closer to the efficiency frontier than state-owned banks, but that this gap narrows substantially once governance quality is controlled for. The paper concludes that for Uzbekistan — where state-owned banks still held approximately 65 per cent of sector assets in 2025 — the binding constraint on efficiency is not the formal ownership share as such, but the persistence of policy-directed lending, weak non-performing asset recognition and an underdeveloped funding base. Six policy recommendations are formulated, including the sequencing of privatisation, the creation of a professional problem-asset resolution mechanism, and the shift from branch-based to platform-based operating models.