THE EFFECTIVENESS OF CORPORATE GOVERNANCE IN BANKS AND ITS IMPACT ON FINANCIAL PERFORMANCE AND RISKS

The relationship between corporate governance models, characterized by ownership and control structures, and the profitability and risk profiles of Uzbekistan's largest commercial banks is examined during the active phase of banking sector reforms. State-controlled banks accounted for approximately 68% of total assets in the study sample. However, their median return on assets (ROA) was 0.6%, compared with 4.7% for non-state banks, while median return on equity (ROE) was 3.7% and 27.5%, respectively. Regression results controlling for other relevant factors indicate that state control is associated with a statistically significant reduction of 2.7–4.3 percentage points in ROA and 19–29 percentage points in ROE (p < 0.01). Both loss-making observations among state-controlled banks in 2024 coincided with substantial loan-loss provisioning related to legacy corporate loans. The risk-adjusted financial stability indicator for state-controlled banks (Z = 4.9) was approximately half that of non-state banks (Z = 8.8). Among the control variables, capitalization was the only factor consistently associated with higher profitability.

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