DEVELOPMENT OF THE CAPITAL MARKET AS A FACTOR OF FINANCIAL SYSTEM DIVERSIFICATION IN UZBEKISTAN

Abstract

This article examines the development of the capital market as a structural factor in the
diversification of the financial system of Uzbekistan. The study argues that a modern capital
market is not only a platform for buying and selling securities but also an institutional mechanism
that redistributes savings into productive investment, reduces excessive dependence on bank credit,
improves corporate transparency and creates alternative long-term financing channels for
enterprises. The relevance of the topic is determined by the current stage of economic reforms in
Uzbekistan, where financial intermediation remains heavily concentrated in the banking sector,
while equity and corporate bond instruments are still developing. The research applies a descriptive,
comparative and institutional approach based on official statistics of the Republican Stock
Exchange “Toshkent”, regulatory documents on capital market development, analytical materials
of national and international institutions, and theoretical views of Uzbek and foreign economists.
The results show that the Uzbek capital market has entered a more active phase: in 2024,
transactions on the exchange with listed securities reached UZS 19.56 trillion, while the total
trading volume across exchange platforms reached UZS 21.95 trillion. Nevertheless, low free float,
weak secondary market liquidity, limited investor participation, insufficient corporate disclosure
and the dominance of state-linked issuers continue to restrict the market’s capacity to diversify the
financial system. The article substantiates that the next stage of reform should focus on increasing
the supply of quality securities, developing the corporate bond market, expanding the base of
institutional investors, strengthening investor protection, introducing market-making mechanisms and improving financial literacy among households and entrepreneurs