International scientific journal
“Interpretation and researches”
Volume 2 issue 2 (24) | ISSN: 2181-4163 | Impact Factor: 8.2
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FINANCIAL LITERACY IN UZBEKISTAN
Husainov Ravshan Rahimovich
prof. Tashkent, TSTU
Ibragimova Saodat Abdumominovna
prof. Tashkent, TSTU
Abstract:
This article is dedicated to the study of the role and importance of
increasing financial culture and financial literacy necessary for modern individuals.
Keywords:
financial literacy, bank, consumer lending, awareness of the need to
increase the financial literacy of the population.
Introduction
Financial literacy is the ability to manage cash flows wisely, allocate resources
sensibly, that is, the ability to live within means and appropriately grow existing
capital.
Financial literacy can help you achieve financial health and maintain it
throughout your life. With such knowledge, a person will not constantly live
paycheck to paycheck and will only take a loan when confident that such behavior
will bring future income.
The issue of financial literacy and its enhancement has long been a concern,
both in Uzbekistan and globally. These issues become even more relevant when
services can be provided remotely using new technologies, and payments can be
made through mobile devices. Uzbekistan has been developing within market
relations since the 1990s. There is also a deeper understanding of the problems faced
by most citizens, as well as the prospects and mechanisms for their solutions.
Relevance
In the current situation, when financial services continue to expand and become
more complex, and new and intricate instruments of knowledge about financial
resources emerge, financial literacy of people becomes extremely important.
Methods and Materials
A systemic approach was used in the study to examine the mechanism of
financial and tax literacy. Statistical and analytical materials from the Bank of
Uzbekistan and statistical authorities were used as the information base.
Main Part
At the current stage of market relations development in Uzbekistan, there is an
awareness of the need to increase the financial literacy of the population. Financial
literacy is primarily the possession of sufficient knowledge and skills in the financial
sphere, which allow for a correct assessment of the market situation and making
International scientific journal
“Interpretation and researches”
Volume 2 issue 2 (24) | ISSN: 2181-4163 | Impact Factor: 8.2
256
informed decisions. Understanding key financial concepts and being able to use them
in practice allows individuals to manage their money wisely. That is, to track income
and expenses, avoid excessive debts, plan personal budgets, and create savings.
It is worth noting that its economic development largely depends on the overall
level of financial literacy of the country's population. Such a low level of knowledge
can have negative consequences not only for consumers of financial services but also
for the country, the private sector, and society as a whole. Therefore, the development
and implementation of programs to increase the financial literacy of the population is
an important direction of state policy in many developed countries such as the USA,
UK, and Australia.
A high level of financial literacy among residents contributes to the socio-
economic stability of the country. Increasing the level of financial knowledge helps
reduce the risk of excessive consumer debt, reduce the risk of fraud by dishonest
market participants, etc. In Uzbekistan, the level of financial literacy is low. Only a
small percentage of citizens are aware of the services and products offered by
financial institutions. According to a report published by the World Bank as of 2021,
only 3% of Uzbekistan's adult population kept their money in local banks because
they considered them complex and confusing.
A small portion of the adult population in Uzbekistan knows about deposit
insurance system, half of whom have only heard the name but cannot explain it.
In recent years, Uzbekistan has been paying more attention to increasing
financial literacy, considering it as a key factor in the country's economic
development.
The majority of the population does not acknowledge personal responsibility for
their financial decisions, believing that the state should compensate for everything.
This statistic shows that it is necessary to address the issue of increasing financial
literacy at the state level. For example, the decree of the President of the Republic of
Uzbekistan on measures for further development of the capital market dated
13.04.2021 No. UP-6207.
Low levels of financial literacy lead to an increase in financial market crime.
Low financial literacy not only hinders the development of legal businesses but also
stimulates the growth of illegal businesses. Uneducated consumers can easily fall into
the trap of scammers, thereby unknowingly contributing to the growth of financial
pyramids. These pyramids promise to eliminate all debts for small fees, but in reality,
they do not help solve the debtor's problem, but rather push the debtor further into a
desperate situation and deprive them of their funds.
Charlatan lawyers also take advantage of their poor financial knowledge to write
meaningless letters to various authorities and charge exorbitant fees. Seeking help
from a credit broker may even threaten the consumer with accusations of fraud or
International scientific journal
“Interpretation and researches”
Volume 2 issue 2 (24) | ISSN: 2181-4163 | Impact Factor: 8.2
257
document forgery. Currently, significant attention is being paid to addressing these
issues.
Financial ignorance is an extremely dangerous thing. Investment products are
becoming more accessible, but people lack the necessary knowledge to use them. If
we take the most common services: consumer loans, credit cards, mortgages, leasing,
almost everyone is involved in personal financial planning, making credit and
investment (including pension savings) decisions. Due to illiteracy, millions of
people make destructive decisions that will affect every family, society, and the
country as a whole.
The financial illiteracy of the population negatively impacts not only the well-
being of individuals but also the entire financial sector. For example, citizens incur
creditor debt due to poor planning or a lack of clear understanding of their income
and expenses; illiteracy leads to an increase in the number of financial pyramids and
fraud. Globally, this can lead to a financial crisis in the country's economy.
Unfortunately, increasing the availability of information on financial services
does not automatically mean an increase in financial literacy. It must be
acknowledged that not every consumer recognizes the usefulness of financial
knowledge and desires to acquire it. We believe that introducing mandatory financial
literacy courses in Uzbek schools and universities will help rectify this situation.
As part of the financial literacy program on the market, intermediaries between
clients and financial institutions are being created. For example, we need independent
insurance brokers, not people who take a percentage from the insurance company, but
people who take money from the clients themselves; independent financial
consultants so that people can receive money from bankers, insurance companies,
third-party investment funds for consultations.
Involving all layers of the population in the process of financial education
requires significant costs and efforts. One of the most important directions is to
increase the financial literacy of young people who are about to enter the complex
world of finance. The modern development of innovative projects will accelerate the
process of increasing financial literacy among youth and the entire population.
Scientists, experts, and governments have been tasked with developing new methods,
solutions, and standards to ensure the success of financial literacy programs and
consumer protection.
As part of the financial literacy program on the market, intermediaries between
clients and financial institutions are being created.
For example, we need independent insurance brokers, not people who take a
percentage from the insurance company, but people who take money from the clients
themselves; independent financial consultants so that people can receive money from
bankers, insurance companies, third-party investment funds for consultations.
International scientific journal
“Interpretation and researches”
Volume 2 issue 2 (24) | ISSN: 2181-4163 | Impact Factor: 8.2
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Influencing issues of financial and tax literacy should be comprehensive: direct
influence from the state, market participants, and the public; otherwise,
misunderstandings and obstacles may arise.
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Decree of the President of the Republic of Uzbekistan dated April 13, 2021 N
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