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Informal credit institutions in transition countries: A study of urban money lenders in post-communist Uzbekistan

Ruziev, Kobil; Midmore, Peter


Kobil Ruziev
Associate Professor in Economics Education

Peter Midmore


Research on informal financial institutions in transition economies is scant. This study investigates behaviour of urban money lenders in Uzbekistan. Money lending in Uzbekistan is a relatively new business which emerged mostly in response to targeted demand from fellow entrepreneurs during transition. We find that their lending behaviour is more stringent than suggested by previous studies of rural money lenders. They always require collateral, do not engage with the poor and avoid lending for consumption purposes. Their lending is short-term and targeted on specific business opportunities which enjoy healthy cash flows and offer quick returns. They have limited outreach from serving networks of connections within small geographical localities. Since they rely exclusively on their own resources for loanable funds, they often have to ration their loans. They actively use all available information and instruments to reduce default risks. Although borrowers live in closer geographical proximity to lenders in urban areas, they are also engaged in various heterogeneous activities and are more self-reliant with respect to the local community, which reduces the accuracy of money lenders' assessment of the character of borrowers as well as of their ability to repay. © 2014 © 2014 Taylor & Francis.


Ruziev, K., & Midmore, P. (2014). Informal credit institutions in transition countries: A study of urban money lenders in post-communist Uzbekistan. Post-Communist Economies, 26(3), 415-435.

Journal Article Type Article
Publication Date Jan 1, 2014
Journal Post-Communist Economies
Print ISSN 1463-1377
Electronic ISSN 1465-3958
Publisher Taylor & Francis (Routledge)
Peer Reviewed Peer Reviewed
Volume 26
Issue 3
Pages 415-435
Keywords informal credit institutions, post-communist, Uzbekistan, moneylenders
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