Volume 03 Issue 10-2023
20
International Journal Of Management And Economics Fundamental
(ISSN
–
2771-2257)
VOLUME
03
ISSUE
10
P
AGES
:
20-27
SJIF
I
MPACT
FACTOR
(2021:
5.
705
)
(2022:
5.
705
)
(2023:
7.
448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
ABSTRACT
The article describes the nature and functions of the competition mechanism between banks and financial institutions,
the features of the organization of financial institutions' services. A scientific proposal and practical recommendations
on improving competition in commercial banks of our republic have been developed.
KEYWORDS
Competition, banking, financial institutions, financial technologies, financial institutions, risk, securities, universal
bank.
INTRODUCTION
In a situation where it is an important task to ensure
food and energy security arising in the background of
the ongoing complex pandemic and the consequences
of the global economic crisis, various disturbances and
conflicts, the entry of various institutions in the
interbank market will increase competition in the
banking sector, and in front of banks, various causes
the need to solve tasks immediately. The increase in
the types of services in the financial sector is leading to
changes in the structure of the banking sector. This
requires creating a modern, transformalized structure
of banks, extensive use of global and advanced
Research Article
DIRECTIONS OF DEVELOPMENT OF THE COMPETITION MECHANISM IN
THE INTERBANK MARKET
Submission Date:
October 01, 2023,
Accepted Date:
October 06, 2023,
Published Date:
October 11, 2023
Crossref doi:
https://doi.org/10.37547/ijmef/Volume03Issue10-04
Mansurbek R. Kulmetov
PhD, Department Of “General Economic Sciences”, Tashkent Institute of Management
and Economics,
Uzbekistan
Journal
Website:
https://theusajournals.
com/index.php/ijmef
Copyright:
Original
content from this work
may be used under the
terms of the creative
commons
attributes
4.0 licence.
Volume 03 Issue 10-2023
21
International Journal Of Management And Economics Fundamental
(ISSN
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VOLUME
03
ISSUE
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20-27
SJIF
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FACTOR
(2021:
5.
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(2023:
7.
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
information technologies. For this reason, in the
"Development Strategy of New Uzbekistan for 2022-
2026" [1] approved by the Decree of the President of
the Republic of Uzbekistan dated January 28, 2022 No.
PF- 60 the share of the private sector in assets is set to
reach 60 percent. Modern universal banking requires
not to be slow, bureaucratic, inefficient, not knowing
one's work, not being able to get out of risky
situations, without income and not being able to
withstand competition, but it should reflect speed,
strong specialists, the use of modern banking
technologies, always achieving profit and tolerance to
competition. requires. In world practice, the
universalization of banks in developed countries is
increasing rapidly, while in developing countries, this
situation is being realized step by step. Universal
banking mainly focuses on the following areas:
information, risk, operations with securities and capital
management. In addition, the development of
activities leads to the expansion of new types of
banking operations. In world practice today, the
method of "innovative thinking" regarding the
application of new information technologies in the
banking system is widely promoted. "Innovative
thinking" refers to the introduction of new strategic
marketing services in the field of banking services and
the extensive involvement of new banking
technologies in banking operations. If the bank made 6
percent of the total costs of importing technologies in
the service sector, now the cost of these technologies
is 25-30 percent in developed countries. This new
service is a change in the service industry and
innovations in the internal environment in attracting
customers leads to the development of the
competition mechanism in the interbank market.
REVIEW OF LITERATURE ON THE SUBJECT
Based on the conclusions of scientists who have
conducted research in this field, it is possible to analyze
different approaches. In particular, the concept of
competition is different, and it is formed on the basis
of supply and demand. As the main factors
determining the level of competition, demand and
supply in the market were taken as the main criteria.
Therefore, the concept of statistical equality is based
on the optimal point of competition[2]. According to
this theory, competition is a statistical determinant,
and financial institutions participating in the market
will not sell products at high prices and profit levels will
not be as high as they predict. Against this, the Austrian
school teachers argued that competition should be a
factor that is determined on the basis of struggle. One
of the founders of this school, Curno, was one of the
first to justify the need for free competition in the
market and the possibility of developing competition
on this basis.
Competition is a concept that defines the situation in
the market, in which the price in the market is freely
determined and is almost equal to the production
costs. In order to achieve a competitive market, it is
Volume 03 Issue 10-2023
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International Journal Of Management And Economics Fundamental
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VOLUME
03
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SJIF
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FACTOR
(2021:
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(2023:
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
necessary to have a number of offers, in which the
number of competitors in the market should not be
taken into account at all, it is necessary to create a free
entry and exit in the market [ 2]. Edgeworth,
Jevonsom, Walrasom, Marshall and Clarke can be
mentioned among the scientists who took a
theoretical approach to competition. In the book "Risk,
Uncertainty and Profit" published by them, it is
mentioned that perfect interbank competition is the
main anti-monopoly factor [3]. As we know, in the
conditions of monopolistic competition, financial
institutions establish their dominance in the market by
controlling the price. There are different views on the
basis of the statistical theory of oligopoly, and this
theory makes it possible to change the structural
structure of the market. Oligopoly theory presents the
market structure, perfect competition, imperfect
competition and monopoly. Competitions in this form
are based on different concepts, and their correct
interpretation in the market is important for
enterprises and organizations. The core of competition
is definitely the financial institutions participating in
the market and their position in the market. The
process of interbank competition is created on the
basis of a certain mechanism, and its participants are
considered as its important principle [4]. According to
the author, the relationship between people plays the
main role in the competition, but other scientists
believe
that
everyone
participates
in
the
competition[5].
Economist in this field from the scientists of our
republic T.I. Bobakulov[6] puts forward the following
opinion as an important factor of interbank
competition: "...in the current environment, where a
healthy interbank competition environment has not
been formed, the implementation of an open market
operation by the Central Bank of our republic with one
or two banks will create a favorable and uneven
competitive environment for these banks" causes.
Economist Sh.Z. Abdullaeva [7] emphasizes that "... in
the conditions of fierce competition, one of the main
directions of the activity of commercial banks is
investment activity".
RESEARCH METHODOLOGY
The purpose of the research is to develop the
mechanism of competition between banks and
financial institutions and to make scientific conclusions
for the development of scientific and practical
proposals and recommendations based on the results
of the analysis of the practice of ensuring the entry of
banks into the interbank market. As a theoretical and
methodological basis of this article, general economic
literature and scientific articles, can banks and financial
institutions compete among economists? based on the
analysis of their written and oral opinions, expert
assessment,
process
monitoring,
conclusions,
suggestions and recommendations based on a
systematic approach to economic events and
processes.
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
In the process of studying the subject, banks and
special approaches to systematization of information
of financial institutions were used, that is, methods
such as comparison, compilation of theoretical and
practical materials.
RESULT AND DISCUSSION
Companies, firms and large financial institutions that
compete with banks in global practice can be described
in general as follows:
1. Competitors of commercial banks in the interbank market [8]
COMMERCE
BANKS
RA COVERS
Financial
institutions
Financial
institutions
Financial
technologies
Commercial banks
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VOLUME
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SJIF
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(2021:
5.
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(2022:
5.
705
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(2023:
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OCLC
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1121105677
Publisher:
Oscar Publishing Services
Servi
As we know, the banks themselves, various financial
institutions and large financial companies, that is,
katomerats, were seen as competitors of commercial
banks. In the following years, another important
competing financial technology began to enter the
banking market. This makes it necessary for banks to
pay special attention to this area.
Acceleration of the process of integration in the world
creates the basis for the development of various
processes in the financial markets. Fundamental
changes in the world economy are causing new
products to enter the financial markets of all countries,
increase the quality of services, and create new
innovative products of information technology. This
has led to the growth of fierce competition in the
financial market of any country.
The creation of new innovative ideas by financial
institutions or the introduction of large amounts of
funds in this area has ensured the fierce competition in
the technology market. The introduction of new
innovative ideas in any field is an important resource
for its development. Currently, the scale of expenses
spent by financial institutions to create innovative
ideas is increasing. In particular, the change from 2010
to 2015 changed from 54% to 59%. By 2023, this indicator
is expected to reach 63%. [9]
The amount of income from the created innovative
ideas decreased by 2.5% in 2017 compared to 2016,
while the growth rate in 2018 compared to 2017 was
11.4%. In 2020, it can be observed that the income from
the innovative ideas presented has increased.
Therefore, the increase in funds spent on innovative
ideas will lead to increased competition in all areas. In
the banking market, competition takes place not only
among banks, but also between different financial
institutions.
Therefore, it is not important to take banks' affiliation
as a basis for evaluating competition in the banking
market. In this case, as a result of determining the
source of information and approach, classification by
factors and structure, studying the environment of
inter-bank competition based on directions such as
setting specific indicators, and timely and step-by-step
performance of relevant tasks within each direction, a
mechanism for effective assessment of competition
between commercial banks will be created. We can
consider these processes by reducing them to a single
system through the following picture.
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Figure 2. Mechanism for evaluating the competitiveness of commercial banks[8]
As you can see from the picture above it will be
possible to increase the competitiveness of banks in
the interbank market by creating a mechanism for
assessing the competitiveness of commercial banks.
the strategic goal of every bank should be to develop
skills to compete with the financial institutions
entering the banking market of our republic.
Competition between financial institutions and banks
in the world banking market is gradually developing.
Mechanism for assessing the competitiveness of commercial banks
Collection of general and internal reports
Analysis of internal and external sources
Study of financial and non-financial activities
Identifying the
source of information
Classification by
factors
Set indicators
Classification by
structure
Determine the
approach
Rating assessment
Guess the price
Alignment of indicators
Assessment of internal factors
Evaluation of external factors
Summary of quantitative indicators
Summary of quality indicators
Program approach
Expert approach
Volume 03 Issue 10-2023
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Publisher:
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Servi
This means that it is important for each country to
notice the changes in the banking market in time, to
apply new innovative technologies to the banking
sector.
CONCLUSION
In general, financial institutions are considered an
innovative component of modern international
financial markets and have a high potential for
development.
Therefore, the development of skills to compete with
financial institutions in the banking market of our
republic should be a strategic goal of every bank.
Competitors of banks are developing in the world
banking market. This means that it is important for
every country to notice the changes in the banking
market in time, to apply new innovative technologies
to the banking sector.
Studying the latest trends in the world will not be
without benefits. Because, in the era of rapid exchange
of tangible and intangible assets on the balance sheets
of banks in the world, it will be appropriate for us not
to focus only on the export of products, but to study
know-how and technologies in sync with the times, and
at the same time, to bring the use of the digital
economy to a new level.
Also, it is necessary to actively use financial
technologies to improve the quality and popularity of
financial services provided by commercial banks. For
example, with the help of such technologies, it is
possible to exchange credit information, establish
cooperation with non-bank institutions and financial
platforms within the framework of open banking
(open banking).
-
the world financial market as a direct
competitor in the banking market;
-
it is necessary to develop a system of necessary
measures for the use of digital technologies in the
banking market;
-
new innovative types of banking services,
digital payment, blockchain, remote service, further
improvement of the use of internet banking;
-
introduction of modern banking practices and
criteria, including transition of modern IT systems to
digital banking and preservation of previously
introduced types of services;
-
identification and use of plastic cards of bank
issuers in the unified payment system;
-
achieving complete liberalization of the
banking sector;
-
fiscalization of payments, implementation of
integration of relevant services into digital platforms of
banks;
Therefore, the development of skills to compete with
new financial institutions entering the banking market
of our republic should be a strategic goal of every bank.
This means that it is important for each country to
notice the changes in the banking market in time, to
apply new innovative technologies to the banking
sector.
Volume 03 Issue 10-2023
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International Journal Of Management And Economics Fundamental
(ISSN
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2771-2257)
VOLUME
03
ISSUE
10
P
AGES
:
20-27
SJIF
I
MPACT
FACTOR
(2021:
5.
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(2022:
5.
705
)
(2023:
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448
)
OCLC
–
1121105677
Publisher:
Oscar Publishing Services
Servi
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"Development Strategy of New Uzbekistan for
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2.
Caviglia, G, Krause, G and Thimann, C. 2002: Key
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Degryse, H., Kim, M., and Ongena, S. (2009).
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of
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and Applications in Empirical Finance , page 197 .
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Weill, L. 2003: Banking efficiency in transition
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592
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Naldi, M., Flamini, M. (2014). Interval Estimation of
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318-323 .
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Bobakulov T.I. Ensuring the stability of the national
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Abdullaeva Sh.Z. Money, credit and banks. -
Tashkent. 2000. -B.228-229.
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https://www.pwc.com/ee/et/publications/pub/202
0-Global-Innovation-1000-Fact-Pack.pdf
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www.cbu.uz - the official website of the Central
Bank of the Republic of Uzbekistan.
