Digital Transformation in Banking: Interpersonal Networks and Economic Growth in the Digital Economy - A Case Study of Uzbekistan

The transition from centrally planned systems to market-oriented models in post-Communist economies stemmed from a belief in market efficiency. On the other hand, there are clear inefficiencies in market-driven systems, particularly when it comes to the provision of financial services to enterprises. In market-based economies, formal funding notably shows an unfair advantage in favor of larger organizations, consequently disadvantaging smaller and younger organizations. While conventional explanations attribute these discrepancies to market flaws and information gaps, recent research accentuates the substantial influence of institutional and political factors on resource allocation. Beyond regulations, informal networks, such as political affiliations and personal connections, significantly impact formal financing distribution, perpetuating exclusivity and inefficiency. This paper analyzes how Uzbekistan's different distribution of formal finance is affected by relationships. In particular, it examines the function of these relationships in the changing digital environment of the country's banking industry, bridging the gap between the effects of digital changes and social media. It seeks to throw light on the intricate relationships between digital change, interpersonal networks, and the combined effects of these factors on Uzbekistan's economic growth.

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