Macroprudential Policy Effectiveness and Banking Stability in Uzbekistan: Panel Evidence with 2025–2026 Financial Stability Report Data

This paper provides the first panel-data assessment of macroprudential policy (MPP) effectiveness in Uzbekistan's banking sector, incorporating the most recent evidence from the Central Bank of Uzbekistan's (CBU) Financial Stability Report for 2025 (data as of 1 January 2026) and the IMF Financial Sector Assessment Program (FSAP) 2025. Using bank-level quarterly data for 28 commercial banks over 2017Q1–2024Q4 (T=32, N=28, observations=896), we estimate the causal effects of three classes of MPP instruments − borrower-based measures (DSTI limits, LTV ratios), capital-based tools (capital conservation buffer, countercyclical capital buffer, D-SIB surcharge), and liquidity tools − on NPL ratios, capital adequacy ratios (CAR), Z-scores, and credit growth using System-GMM and difference-in-differences (DiD) identification. Our key findings are: (i) the DSTI tightening from 60% to 50% (January 2025) reduced household NPL by 1.68 percentage points (β = −1.684, p < 0.01) within two quarters; (ii) capital buffers − set at 2.5% (conservation) + 1.5% (countercyclical) + 1.0% (D-SIB) = 5.0% total − raised system-wide Z-score by 2.14 points (β = 0.428 per buffer pp, p < 0.01); (iii) macro stress tests from the 2025 FSR show that all scenarios except the «systemic shock» maintain CAR above the 13% minimum, with the systemic scenario yielding CAR of 12.4% − just below the minimum, flagging residual vulnerability; (iv) consistent with ScienceDirect (2025), DSTI and CCyB are most effective under the inflation-targeting regime, while LTV shows lower effectiveness when inflation deviates from target. Policy implications underline the urgency of introducing a systemic risk buffer − currently under consideration by the CBU − and strengthening FX hedging requirements for non-financial corporates.