ECONOMETRIC ANALYSIS OF THE FACTORS AFFECTING INTERBANK COMPETITION IN THE DIGITAL BANKING SERVICES MARKET
DOI:
https://doi.org/10.5281/zenodo.21309137Keywords:
interbank competition, digital banking, net interest margin (NIM), Herfindahl–Hirschman Index (HHI), Engle–Granger cointegration, ARDL model, OLS regression, Granger causality, Newey–West HAC, Uzbekistan.Abstract
This article presents a comprehensive econometric analysis of the factors affecting interbank
competition in Uzbekistan’s digital banking services market. Based on official quarterly data from the Central
Bank of Uzbekistan for the period 2018 Q1–2024 Q4 (28 quarters) and monthly data from January 2024 to
January 2026 (25 months), the study applies a ten-stage econometric framework, including the Augmented
Dickey–Fuller (ADF) and Kwiatkowski–Phillips–Schmidt–Shin (KPSS) unit root tests, the Engle–Granger
cointegration test, an Autoregressive Distributed Lag (ARDL) model, multivariate OLS regression with Newey–
West HAC standard errors, robustness checks across six alternative specifications, the Chow structural break
test, and bidirectional Granger causality testing. The empirical findings reveal a statistically significant long-run
negative relationship between remote banking users and the net interest margin (NIM): the OLS coefficient is β
= −1.144 (p < 0.001), with R² = 0.818 and F = 48.43, while the ARDL long-run coefficient of β = −1.247 confirms
the robustness of the result. The Engle–Granger test confirms cointegration between NIM and log(remote
users) at the 1 percent significance level (test statistic = −4.124, p = 0.008). The Herfindahl–Hirschman Index
(HHI) declined from 1,500 to 924, representing a 38.4 percent reduction over the analysis period, with a
trend coefficient of −20.06 units per quarter (p < 0.001). Granger causality testing confirms an asymmetric
relationship: digital service users Granger-cause NIM (F = 8.67, p = 0.008), but not vice versa. State-owned
banks exhibit significantly higher NPL levels than private banks (Cohen’s d = 0.664; t = 3.32, p = 0.003).
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