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International Journal of Advance Scientific Research
(ISSN
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2750-1396)
VOLUME
05
ISSUE
03
Pages:
27-34
OCLC
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1368736135
A
BSTRACT
This scientific article describes the economic essence of the capital market and its significance in the
development of the national economy. The dynamics of capital market development and the scientific
aspects of attracting financial resources from the capital market have been studied based on the
conclusions of scholars. The main directions for capital market development and the practical aspects of
attracting financial resources have been analyzed. Proposals for improving the methodological aspects of
attracting financial resources from the capital market in Uzbekistan have been developed.
K
EYWORDS
Capital market, stock, corporate bond, financial instrument, refinancing rate, devaluation, currency risk.
I
NTRODUCTION
As the country's economy continues to develop,
corporate structures operating in various
industries and sectors experience an increasing
need for financial resources. Over the past seven
years, the growing scale of production and service
activities in Uzbekistan has necessitated the
introduction of modern instruments for capital
attraction. Moreover, reforms undertaken by large
joint-stock companies to attract financial resources
from the international capital market have
prompted other joint-stock companies to
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Research Article
IMPROVING THE METHODOLOGICAL FOUNDATIONS OF
ATTRACTING FINANCIAL RESOURCES FROM THE CAPITAL
MARKET
Submission Date:
January 10,
2025,
Accepted Date:
February 19, 2025,
Published Date:
March 14, 2025
Crossref doi:
https://doi.org/10.37547/ijasr-05-03-04
Mavlyanova Yulduzxon Turg‘unovna
Independent Researcher, Tashkent State University of Economics, Uzbekistan
Volume 05 Issue 03-2025
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International Journal of Advance Scientific Research
(ISSN
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2750-1396)
VOLUME
05
ISSUE
03
Pages:
27-34
OCLC
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1368736135
accelerate efforts in this direction and implement
this experience in their practices.
We believe that the effective implementation of
legislative
reforms
aimed
at
improving
Uzbekistan’s capital market will naturally
contribute to accelerating these processes. In the
2022-2026 Development Strategy of New
Uzbekistan, one of the key objectives is to "increase
the turnover of the stock market from 200 million
USD to 7 billion USD over the next five years by
gradually liberalizing capital movement and
privatizing large enterprises and their shares
(including through the stock exchange)" [1].
Comprehensive efforts are being made to ensure
the successful execution of these tasks. However, it
should be noted that many joint-stock companies
have not fully utilized the opportunities and
conditions created for them. Although there are
currently more than 630 joint-stock companies
operating in Uzbekistan, only five of them
participate in the international stock market.
Furthermore, only 18.0% of these companies are
listed on the national stock exchange and engage in
trading their securities.
Therefore, ensuring the participation of joint-stock
companies in the securities market and integrating
them into the global stock markets has become an
urgent issue. In this regard, further scientific
research, the study of best international practices,
and the development of scientific proposals and
practical recommendations for their application in
Uzbekistan are of great importance.
L
ITERATURE REVIEW
Many researchers in Uzbekistan and abroad have
studied the role of the securities market in national
economic development and the key aspects of
attracting financial resources from the capital
market.
The capital market refers to a specialized market
where savings and investments are allocated
between suppliers of funds and participants who
need them. The participants in this market include
institutional investors, financial institutions,
companies, corporations, and governments. The
capital market serves as a primary source of
financial resources for large companies, while also
acting as a significant source of financial income for
them [2].
In the current stage of global economic integration,
the capital market serves as a "platform" for
corporations and large companies to secure key
financial resources. Various financial instruments
such as derivatives, Eurobonds, precious metals,
and crypto assets are actively traded in today’s
capital market. Theoretically, the capital market is
divided into primary and secondary markets [3].
The term "capital market" is broad, encompassing
various institutional participants and companies
engaged in trading financial instruments. These
trades may occur directly through business-to-
business (B2B) interactions or via digital
platforms. The capital market includes the stock
market, bond market, and foreign exchange (forex)
market. The largest markets are concentrated in
major financial centers such as New York, London,
Singapore, and Hong Kong [4].
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In recent years, Uzbek economic researchers have
also conducted studies aimed at improving the
scientific foundations of financial resource
mobilization through the capital market.
According to Professor O. Khamdamov, particular
attention is being given to attracting financial
resources from the international capital market to
provide additional financing to joint-stock
companies and improve Uzbekistan’s sovereign
credit rating. He argues that integrating joint-stock
companies into the international financial market
enhances their international competitiveness and
facilitates the adoption of innovative technologies
in production processes [5].
International financial institutions possess large
financial resources and significant regulatory
authority. Today, these institutions constitute the
foundation of global financial and credit relations.
Cooperation
with
international
financial
institutions enables a country to not only attract
substantial investments into its economy but also
strengthen its position and influence in the global
financial system [6].
The securities market plays an important macro-
economic function by redistributing investment
resources into more profitable and promising
sectors. At the same time, it provides the most
efficient means for joint-stock companies to attract
financial resources [7].
Supporting M.I. Kasimova’s definition of the capital
market, we can say that the capital market
represents economic relations between economic
entities, where demand and supply for investment
products are formed. In this regard, Kasimova
legally associates capital markets with investment
goods such as cash, securities, and other forms of
capital aimed at generating profit [8].
Similarly, R.R. Rubsov defines the financial market
as a system of economic relations and institutions
associated with the movement of monetary capital
[9].
Based on the above, we can conclude that the
capital market plays a vital role in allocating
financial resources among economic actors. By
redistributing idle financial resources among
various entities, the capital market contributes to
macroeconomic stability.
R
ESEARCH METHODOLOGY
This
article
employs
various
research
methodologies, including scientific analysis,
generalization, classification, comparative analysis,
economic assessment, statistical evaluation, expert
assessment, observation, and other analytical
methods.
A
NALYSIS AND RESULTS
Ongoing political and economic changes at the
international level are significantly impacting the
infrastructure of the global capital market. Under
these conditions, developing economies must
consider rising interest rates when attracting
financial resources, as companies and corporations
are now required to demonstrate higher efficiency
in value-added generation.
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The process of attracting financial resources from
the capital market by joint-stock companies
includes various components and methodological
approaches. In this process, the transformation of
financial resources takes place, which involves
multiple stages, from making investment decisions
in the capital market to issuing financial
instruments. Additionally, on the issuer’s side, this
process includes steps from decision-making on
capital raising to preparing the issuance
prospectus.
The transformation of financial resources in the
capital market is equally important for issuers,
investors, and the state. Identifying key challenges
in capital market development requires analyzing
ongoing transformational changes and addressing
deficiencies through strategic action plans (Figure
1).
As a key segment of the capital market, the
securities market is well-developed and operates
on international stock exchanges. We believe that
analyzing the capital market's characteristics and
segments should begin with the securities market.
Moreover, the corporate securities market in
Uzbekistan follows international standards in
terms of operating principles, regulatory
framework, issuer requirements, and corporate
governance practices.
Despite specialization in different financial
instruments, recent mergers and acquisitions of
stock exchanges have led to market consolidation
and the universalization of international trading
platforms. This has reduced transaction costs and
risks for market participants when raising financial
resources.
However, the Tashkent Republican Stock Exchange
(RSE) lags significantly behind not only leading
stock exchanges but also many other stock
exchanges in Asia. This limits Uzbekistan’s capacity
to attract financial resources through the capital
market.
For instance, during the first nine months of 2024,
a total of 358,510 transactions amounting to 2.44
trillion UZS were conducted with 99 issuers’
securities on the Tashkent RSE. Although trading
volume has increased fivefold over the past seven
years, it remains relatively low compared to GDP
ratios of other CIS countries.
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Figure 1. The Process of Transforming Financial Resources in the Capital Market
The globalization and expansion of financial
markets on an international scale, the global trend
toward a high level of integration between financial
and industrial capital, as well as the traditionally
strong reputation of banks in the eyes of foreign
investors, are among the key external factors
influencing the acceleration of investment
attraction activities aimed at meeting the needs of
joint-stock companies.
The entire set of internal factors affecting the
strengthening of banks’ activities in supporting the
innovative development of the national stock
market should be divided into two major groups.
The first group includes the high level of
depreciation of fixed assets, the low level of
marketing research on potential product markets,
the lack of innovation development strategies in
many joint-stock companies, as well as issues
related to managerial professionalism and the
underdevelopment of national investment and
financial infrastructure.
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Figure 2. Development Directions Ensuring the Balance Between Supply and Demand for Financial
Resources in the Capital Market
In our opinion, some large joint-stock companies
are unable to independently make decisions
regarding attracting the necessary volume of
investments in the form of long-term loans, leasing
equipment, or investments in securities. Among all
financial institutions, only commercial banks have
a high level of capitalization, a highly diversified
operational structure, and the necessary human
and informational resources. This enables them to
provide practical assistance to issuing companies
in financing modernization programs.
The second group of factors contributing to the
strengthening of banks’ role as a driving force in
the institutional development of the national stock
market is related to the banking sector’s increasing
interest in further integrating industrial and
financial capital. Without these factors, we believe
that Uzbekistan's economy may face delays in
securing a competitive position on the
international stage.
In our opinion, to ensure a balance based on the
demand and needs of joint-stock companies for
financial resources, effective measures should be
implemented in the following key areas (Figure 2).
The distribution of financial resources in the
capital market based on existing supply and
demand factors not only meets the financial needs
of corporate structures but also plays a crucial role
in increasing added value in the economy.
Supply of resources
in the capital market
Demand for financial
resources in the
capital market
Optimization of regulation and control
Improvement of the legal
framework for trading
conditions in the capital
market
Creating preferential
conditions for priority
sectors of the industry
Development of information and digital
technology coverage"
Implementation of
guaranteed and
compensable financial
instruments
Attracting and training
capital market specialists
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C
ONCLUSIONS AND RECOMMENDATIONS
Currently, the development of the capital market
plays a vital role in national economic growth and
in addressing financial security issues faced by
joint-stock companies. In recent years, significant
work has been done to amend legislation,
introduce new regulations, and resolve practical
challenges in this area.
Additionally, we believe it is necessary to ensure
the placement and free circulation of securities
issued by highly profitable joint-stock companies
in the capital market. Furthermore, financial
instruments denominated in foreign currency
should be allowed to participate in securities
market transactions. This is particularly important
given the increasing depreciation of the national
currency against foreign currencies, as it helps
investors mitigate currency-related risks.
To reduce information asymmetry in joint-stock
companies, capital market participants should
implement mechanisms for obtaining up-to-date
information on capital market trends. Expanding
the corporate information portal database by
including financial and investment activity results,
financial
reporting
in
accordance
with
international standards, and forecast indicators for
promising investment projects should be
prioritized. This would not only provide additional
information for investors and shareholders but
also support fundamental research aimed at
improving the financial and investment activities of
joint-stock companies.
One of the key factors in developing the national
capital market is financial literacy and the
infrastructure of the securities market. It is
noteworthy that while the bond market volume
was $70 million in 2018, it reached $1.5 billion by
2024. However, this growth is primarily attributed
to commercial banks, which account for 99% of
government
bond
investments.
Unlike
international practices, this segment lacks retail
investors, pension funds, insurance companies,
and investment firms. Therefore, significant
changes are required in this direction.
R
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1.
Decree of the President of the Republic of
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2026”.
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(ISSN
–
2750-1396)
VOLUME
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Pages:
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