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THE STOCK MARKET AND DEMAND FOR MONEY IN UZBEKISTAN
Farxodova Shaxzoda Sherzod kizi
Tashkent institute of management and economic
Tashkent Uzbekistan.
2-nd level Ecomomic Faculty.
E-mail:
shaxzodafarxodova698@gmail.com
+998990408551
Scientific supervisor:
Kadirova Istora Bobirovna-PhD
Abstract:
This report examines the interaction between the stock market and the demand for
money in Uzbekistan. Uzbekistan is an emerging economy in the process of financial reforms
and liberalization. As Uzbekistan strives to build a developed and efficient market, it is
important to study the interaction between monetary and stock market activities in order to
improve the efficiency of economic growth, make monetary policy more effective, and create a
better investment climate. The stock market in Uzbekistan is relatively young in terms of
development, structure, liquidity, trading volume, and number of listed companies compared to
developed economies. In particular, challenges remain, although recent reforms by the
government to liberalize the economy and attract foreign investment are gradually increasing this
share.
Key words:
stock market, money demand, financial reform, monetary policy, economic
transition, inflation, currency stabilization, investment climate, liquidity, interest rates, financial
infrastructure, economic growth, capital controls, market liberalization, financial market
development, inflation, financial instruments, monetary stability, stock market development.
Abstrakt:
Ushbu hisobotda O'zbekistondagi aksiyadorlar bozorining pulga bo'lgan talab bilan
o'zaro ta'siri ko'rib chiqiladi. O'zbekiston moliyaviy islohotlar va liberallashtirish jarayonidagi
rivojlanayotgan iqtisodiyot hisoblanadi. O'zbekiston rivojlangan va samarali bozorni barpo
qilishga harakat qilayotgani sababli, iqtisodiy o'sish samaradorligini oshirish, pul siyosatini
yanada samarali qilish va yaxshi investitsiya muhitini yaratish uchun monetar va aksiyadorlar
bozoridagi faoliyat o'rtasidagi o'zaro ta'sirni o'rganish muhimdir. O'zbekistondagi aksiyadorlar
bozori, rivojlangan iqtisodiyotlar bilan solishtirganda, rivojlanishi, tuzilishi, likvidligi, savdo
hajmi va ro'yxatga olingan kompaniyalari soni jihatidan ancha yosh. Ayniqsa, hukumat
tomonidan iqtisodiyotni liberallashtirish va xorijiy investitsiyalarni jalb etish bo'yicha so'nggi
islohotlar bu ulushni asta-sekin oshirayotganiga qaramay, hali ham qiyinchiliklar mavjud.
Kalit so`zlar:
Mercer, pul talab, moliyaviy issloxot, monetar siyosat, iqtisodiy oʼtish, inflyatsiya,
valyuta barqarorligi, investitsiya iqlimi, likvidlik, foiz stavkalari, moliyaviy infratuzilma,
iqtisodiy oʼsish, kapital nazorati, bozorni liberallashtirish, moliyaviy bozorni rivojlantirish,
moliyaviy asboblar, monetar barqarorlik, fond bozorini rivojlantirish.
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Абстракт:
В этом отчете внимание будет уделено взаимодействию фондового рынка с
денежным спросом в Узбекистане, который является развивающейся экономикой в
процессе финансовых реформ и либерализации. Поскольку Узбекистан стремится
установить развитый и эффективный рынок, важно изучить взаимодействие между
денежной и фондовой рыночной активностью для повышения эффективности
экономического роста, улучшения эффективности денежной политики и создания более
благоприятного инвестиционного климата. Фондовый рынок Узбекистана значительно
моложе, чем в развитых экономиках, по уровню своего развития, структуре, ликвидности,
объему торгов и количеству зарегистрированных компаний. Несмотря на эти трудности,
недавние реформы правительства, направленные на либерализацию экономики и
привлечение иностранных инвестиций, постепенно увеличивают долю.
Ключевые слова;
Фондовый рынок, спрос на деньги, финансовая реформа, денежная
политика, экономический переход, инфляция, стабилизация валюты, инвестиционный
климат, ликвидность, процентные ставки, финансовая инфраструктура, экономический
рост, контроль за капиталом, либерализация рынка, развитие финансового рынка,
финансовые инструменты, денежная стабильность, развитие фондового рынка.
Introduction.
The relationship between the stock market and the demand for money is a
fundamental topic in financial economics and monetary theory. Understanding how these two
elements interact is crucial for formulating effective monetary and financial policies. In
developing and transitional economies like Uzbekistan, this relationship assumes additional
significance due to the evolving nature of financial markets and the gradual integration of
modern economic mechanisms.
Uzbekistan’s financial sector has undergone substantial reforms over the past decades, aimed at
liberalizing the economy, encouraging investment, and developing capital markets. The
establishment and growth of the Uzbek stock market represent a critical step towards
diversifying the country’s financial infrastructure, providing new channels for investment, and
enhancing the mobilization of savings. However, alongside these developments, the demand for
money — the amount of monetary assets that economic agents wish to hold — remains a key
determinant of liquidity, inflation control, and overall economic stability.
This study focuses on analyzing how the growth and dynamics of the stock market in Uzbekistan
influence the demand for money among households, businesses, and financial institutions.
Specifically, it explores whether increased stock market activity leads to a reduction in money
holdings due to the substitution effect, where individuals shift from cash balances to financial
assets, or whether it complements money demand by improving overall economic confidence
and transaction efficiency.
Given Uzbekistan's unique economic transition, structural changes, and evolving regulatory
environment, it is important to investigate the interdependencies between stock market
development and monetary demand. This research aims to fill a gap in existing literature by
providing empirical evidence and theoretical insights on this topic, thus offering valuable
implications for policymakers, investors, and academics interested in the Uzbek financial market
and its macroeconomic interactions.
Research methodology
. In Uzbekistan, the demand for money depends on several factors such
as economic transition, inflation, and historical lack of trust in the formal banking system that
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fosters a predominant cash society. The Central Bank of Uzbekistan has actively worked towards
currency stabilization and inflation containment which has affected the demand for money and
other assets such as stocks. But many Uzbek investors are still cash and gold or real estate asset
lovers due to low financial literacy and underdeveloped financial infrastructure.
The amount of money required in Uzbekistan also reacts to external demand for money through
inflation and interest rate changes. High inflation rates in the economy decrease the value of cash
which in turn causes people to need foreign currencies as a store of value or cash or assets with a
higher return if the stock market is considered attractive. On the other hand, a low rate of
inflation and interest rates can stimulate consumption and investment and reduce the demand for
liquid money in favor of more active participation in stocks. But since the Uzbek stock market is
poorly developed and is still very thin, the switch from money holding to equity investment is
however very small but has great growth prospects if market reforms articulate themselves with
speed.
Analysis and results
. Monetary policy in Uzbekistan, also affects the level of demand for
money and the stock market performance of the country. The recent steps taken by the Central
Bank towards a more flexible exchange rate policy, lower interest rates and inflation targeting
are meant to stabilize the economy and enhance the environment of investment. The Central
Bank, through lowering the key interest rate, wants to encourage borrowers and expansion of
business that can spark off stock market activity. Of course, if the interest rate is considered too
low, it would lessen the appeal of having cash facilities which may have the opposite effect of
increasing investment. On the other hand, tightening of monetary policy in order to achieve a
lower inflation rate or a lower rate of depreciation of the currency may cause an increase in
demand for money or currencies especially foreign currencies as people are looking for stability.
With the development of economic relations among Uzbekistan and foreign investors, some may
also grab interest in the emerging stock market. Furthermore, foreign entrance is limited by
capital controls, regulatory difficulties, and geopolitical risks. More participation from foreign
investors may increase liquidity on the market and enhance local tolerance toward the stock
market as an alternative to cash.
In conclusion,
therefore, the stock market and demand for money in Uzbekistan infusion a
tangled relationship shaped by structural reforms, monetary policy, inflationary expectations, and
the evolving financial landscape. As the stock market of Uzbekistan remains at its nascent stage,
its short-lived reforms and further stabilization would presumably provide increased confidence
to spur the divestment from cash in favor of the ownership of financial instruments. Hence, an
understanding of this relationship is very important for Uzbekistan's policymaking community
seeking the unique balancing of these objectives-expanding monetary stabilization, growth
objectives, and, additionally, creating an inclusive, resilient financial market contributing to
broader economic goals.
References:
1.
Temirov A. Ways to improve Corporate Governance in Commercial Bank of the
Republic of Uzbekistan.
https://tsue.scienceweb.uz/index.php/archive/article. 2020.
2.
Banks of the Republic of Uzbekistan. https://tsue.scienceweb.uz/index.php/archive/article.
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3.
Umarkhojaeva M. Features of corporate governance in commercial banks of the republic
of Uzbekistan.
4.
Resolution of the President of the Republic of Uzbekistan dated November 21, 2018, N
PP-4022 "On measures to further modernize the digital infrastructure in order to develop the
digital economy".
