Dissertation (Chapter 1,2, 3 Modification)

An investigation of variation and impact of interest rate in commercial banks
after accession to the World Trade Organisation (WTO): The case study of
Republic of Tajikistan

ABSTRACT
This thesis extend the concept of liberalisation of financial market and investigation of variation
and impact of interest rate in commercial banks after accession to the World Trade Organisation
with the reference to case study of Republic of Tajikistan. The study focuses on identifying
whether financial liberalisation has an impact on performance of banking sector or not.
The current research is based on comparative analysis with existing financial liberalisation
approaches applied by numerous countries (Macit, 2017). A mix-method approach has been
implemented with deductive logical approach. This research enriches the literature on the
liberalisation of financial market of Tajikistan, as well as a neighbourhood countries that
implemented the WTO agreements on liberalisation of financial sector. Furthermore, McKinnon
and Shaw’s hypothesis research methodology is applied. Additionally, the data is analysed using
SPSS. Hypotheses are framed and tests are applied.
The research allocated qualitative and quantitative approaches which involved 150 non-
traditional respondents and 8 interviewers. The current research has its basis in a comparative
analysis and existing financial liberalisation approaches as applied by numerous countries
(Meredith, Mantel Jr and Shafer, 2017). Thus, for this research project, the most appropriate
research approach for the completion of the study is a deductive approach.
Limited research has been identified studies on the liberalisation of the financial market in
Tajikistan. But neither of the studies analysed the effect of the variations on interest rates in
commercial financial institutions. Some studies show that by trying to attract and implement
WTO legislation, this field has the potential to improve the investment climate.
The study has been based on considering the risks and issues in the banking practices while
making transaction entries as well as in generating revenue. Liberalisation would be fruitful for
the overall economy of Tajikistan and will initiate healthy growth in the banking sector and as
such, efficiencies will be gained. Commercial banks will be able to accomplish efficiency, and
customers would be served with better and superior services in an effective manner.
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This will be a great source for a banking institutions in generating an adequate amount of capital
funds, in terms of considering the impacts of derivatives which limited to the downside earning
exposures, increases yield, preserves higher earning potential and reduces income/ capital
volatility (Tabit and Moussir, 2016).
Keywords: Investigation, Analysing, Economics, Finance, interest rates, Banks, Tajikistan.
Table of Contents
iii

ABSTRACT...............................................................................................................................ii
LIST OF TABLES.....................................................................................................................viii
LIST OF ABBREVIATIONS..........................................................................................................x
CHAPTER 1: INTRODUCTION...................................................................................................2
1.0 Chapter Introduction....................................................................................................................2
1.1 Background to the Research Topic...............................................................................................2
1.2 Research Problem........................................................................................................................5
1.3 Aim and Objectives of the Research.............................................................................................6
1.4 Research Questions......................................................................................................................6
1.5 Research Hypothesis....................................................................................................................7
1.6 Justification for the Research.......................................................................................................7
1.7 Brief Description of the Research Methodology...........................................................................7
1.8 Outline of the Thesis....................................................................................................................7
1.9 Definition of Terms Used in the Research.....................................................................................8
1.10 Scope of the Research..............................................................................................................10
1.11 Limitations of the Research......................................................................................................12
1.12 Theoretical Background............................................................................................................12
1.13 Chapter Summary.....................................................................................................................13
CHAPTER 2: LITERATURE REVIEW..........................................................................................14
2.0 Introduction...............................................................................................................................14
2.0 Introduction...............................................................................................................................14
2.1 Current condition of interest rate and associated theories with interest rate............................14
2.1.1 Overview.................................................................................................................................14
2.1.2 Theory related to interest rate fluctuation..............................................................................14
2.1.3 International theory related to Interest rate fluctuation.........................................................14
2.1.4 Comparison of both theories...................................................................................................15
2.1.5 Condition of interest rate in commercial banks.......................................................................15
2.1.6 Impact of Interest rate fluctuation in Tajikistan.......................................................................17
2.2 Theory behind fluctuation of Interest Rates................................................................................19
2.2.1 Background.............................................................................................................................19
2.2.2 Interest Rate Parity.................................................................................................................19
2.2.2 Classical theory........................................................................................................................20
2.2.3 How both theory affect country..............................................................................................21
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2.2.4 Model behind used in order to know fluctuation of Interest Rates.........................................23
2.2.5 Analysis of how fluctuation of interest rates took place..........................................................24
2.2.6 Impact of Negative Interest Rates on implementation in different banks or financial
institutions in Tajikistan...................................................................................................................25
2.3 To analyse the impact of interest rate liberalisation in the financial system of Tajikistan..........27
2.3.1 Briefing....................................................................................................................................27
2.3.2 Interest rate relaxation relationship with the financial system................................................28
2.3.3 Relative factors behind the cause of fluctuation of interest rate.............................................34
2.4 Comparing the interest rate liberalization of Tajikistan with the neighbourhood countries.......37
2.4.1 Prelude....................................................................................................................................37
2.4.2 Interest rate liberalisation of Tajikistan with neighbouring countries......................................37
2.4.3 Benefits and challenges of accession to WTO in the banking sector of Tajikistan....................40
2.5 Limitation of the review framework address by the study.........................................................46
2.6 Summary....................................................................................................................................47
CHAPTER 3: RESEARCH METHODOLOGY................................................................................49
3.0 Introduction.....................................................................................................................49
3.1 Theoretical paradigm and assumptions......................................................................................49
3.1.1 Epistemology...........................................................................................................................49
3.1.2 Ontology..................................................................................................................................49
3.1.3 Methodology...........................................................................................................................50
3.2 Selection of research methods...................................................................................................50
3.3 Research Philosophy..................................................................................................................50
3.4 Research approach.....................................................................................................................53
3.5 Pilot Study..................................................................................................................................54
3.6 Research design, Strategy and Procedures.................................................................................54
3.7 Data Collection...........................................................................................................................55
3.7.1 Primary Data Collection...........................................................................................................55
3.7.1.1 Quantitative Questionnaire..................................................................................................56
3.7.1.2 Qualitative Structure............................................................................................................56
3.7.2 Secondary Data.......................................................................................................................56
3.8 Sampling.....................................................................................................................................57
3.9 Ethical Considerations................................................................................................................57
3.9.1 Informed consent....................................................................................................................57
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3.9.2 Privacy and confidentiality......................................................................................................57
3.10 Methodological Limitations......................................................................................................58
3.10.1 Reliability..............................................................................................................................58
3.10.2 Validity..................................................................................................................................58
3.11 Limitations and Delimitation of Study......................................................................................58
3.12 Summary..................................................................................................................................59
CHAPTER 4: FINDINGS...........................................................................................................60
4.1 Introduction...............................................................................................................................60
4.2 Data Analysis..............................................................................................................................60
4.2.1 Test/ Retest Reliability...............................................................................................................................60
4.2.2 Univariate Statistics....................................................................................................................................68
4.2.3 Bivariate Statistics......................................................................................................................................80
4.3 Themes.......................................................................................................................................99
4.3.1 Theme 1: Impact of liberalisation on commercial bank lending rates......................................................99
4.3.2 Theme 2: Bank influences due to commercial bank lending rates..........................................................101
4.3.3 Theme 3: The cost factors affect determination of lending rates in commercial banks in Tajikistan.....102
4.3.4 Theme 4: General factors relevant to the cost of loans..........................................................................103
4.3.5 Theme 5: Influence of the national inflation rate on the central bank’s interest rate policy and lending
rate of commercial banks..................................................................................................................................104
4.4 Conclusion................................................................................................................................105
CHAPTER 5: FINDINGS AND DISCUSSION..............................................................................106
5.1 Introduction.............................................................................................................................106
5.2 Theme 1: Facilities provided by bank with relations to interest rate in deposits......................107
5.3 Theme 2 : Satisfaction through online services provided by bank.............................................110
5.4 Theme 3: Securities with making transactional operations.......................................................114
5.5 Theme 4: Role of banks’ assets and liability management for addressing financial issues........116
5.6 Theme 5: Satisfaction through interest rate charges on borrowed money...............................123
5.7 Conclusion................................................................................................................................128
CHAPTER 6: CONCLUSION, CONTRIBUTION AND RECOMMENDATIONS................................130
6.0 Introduction.............................................................................................................................130
6.1 Review of Research Aim and Objectives...................................................................................130
6.2 Outcome of hypothesis tested..................................................................................................131
6.3 Contribution to Knowledge......................................................................................................133
6.3.1 Theoretical Contribution..........................................................................................................................133
6.3.2 Empirical Contribution.............................................................................................................................135
6.3.3 Practical Contribution..............................................................................................................................135
6.4 Recommendations....................................................................................................................136
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6.5 Limitations recognised in the research.....................................................................................139
6.6 Recommendations for future research.....................................................................................140
6.7 Personal Reflection...................................................................................................................140
REFERENCES........................................................................................................................141
Bibliography........................................................................................................................154
APPENDICES........................................................................................................................156
Appendix A: Questionnaire............................................................................................................156
Appendix B: Interview Questions...................................................................................................157
Appendix C: Interview Transcripts..................................................................................................158
Appendix D: Frequency Analysis:...................................................................................................169
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LIST OF TABLES
4.1 Case Processing Summary
4.2 Reliability Statistics
4.3 Descriptive Statistics
4.4 Descriptive Statistics (Univariate Analysis of Variance)
4.5 Tests of Between-Subjects Effects
4.6 Descriptive Statistics
4.7 Tests of Between-Subjects Effects
4.8 Descriptive Statistics
4.9 Tests of Between-Subjects Effects
4.10 Descriptive Statistics
4.11 Tests of Between-Subjects Effects
4.12 Descriptive Statistics
4.13 Tests of Between-Subjects Effects
4.14 Crosstab (Bivariate Statistics)
4.15 Chi-Square Tests
4.16 Crosstab
4.17 Chi-Square Tests
4.18 Crosstab
4.19 Crosstab
4.20 Chi-Square Tests
4.21 Crosstab
4.22 Chi-Square Tests
4.23 Crosstab
4.24 Chi-Square Tests
4.25 Multivariate Statistics Descriptive
4.26 ANOVA
4.27 Descriptive Statistics
4.28 Correlations
4.29 Model Summary (Regression)
4. 30 ANOVAa
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4.31 Coefficientsa
4.32 Excluded Variablesa
4.33 Collinearity Diagnosticsa
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LIST OF ABBREVIATIONS
WTO - World Trade Organization
IRP - Interest Rate Parity
IMF - International Monetary Fund
EBRD - European Bank for Reconstruction and Development
ITC - International Trade Centre
GDP - Gross domestic product
GFC - global financial crisis
ADB - Asian Development Bank
NBT- National Bank of Tajikistan
NPA - Non-Performing Asset
SME - Small-to-Medium Enterprise
NPV - Net Present Value
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CHAPTER 1: INTRODUCTION
1.0 Chapter Introduction
Financial liberalisation is essential for the financial activities of the organisation. This
introductory chapter provides the background and rationale of the study so that relevant aims and
objectives can be developed. It also describes the research hypotheses and includes a brief
analysis of the research methods that are used in this study.
1.1 Background to the Research Topic
Financial liberalisation should be understood as the removal of restrictions in the activities of
banks in the provision of financial services, for example in the provision of loans and deposit
registration, etc. This enables financial institutions to independently decide to whom and by what
criteria to allocate loans, allows them to set the price (interest rate) for loans and interest rates on
received deposits, and enables them to determine where (aside from lending) to allocate the
funds at their disposal (Bogdan and Biklen, 2003). There is a close connection between
liberalisation and banking crises, which deserves close attention.
In the 1990s, in response to the impact of economic complications, a number of countries
initiated fundamental changes to their monetary policy, institutional structures, and the overall
performance of their economies, as well as changing the means of accomplishing those goals
(Harrod, 2008). Due to the gradual economic backlog, many countries in Latin America and
Asia, and countries with centralised planning, relatively quickly abandoned government
intervention in their economies and liberalised economic activity. The process of liberalisation
also spread to the financial sector, initially to banks, which for a long time had belonged to the
most regulated sphere of entrepreneurship, not only in developing countries but also in many
developed countries. Foremost specialists agree that financial liberalisation in itself is a
progressive change, since it allows investments to be directed to where they can be used most
effectively. Thus, liberalisation helps to accelerate economic progression (Sneider and Larner,
2009). Nevertheless, the experience of numerous countries illustrates that under certain
circumstances, it can produce a growth in rates and risks for some time.
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Financial liberalisation significantly changes the banking sector environment. With liberalisation
there is a risk of a disruption to the normal operation of the banking sector due to a combination
of the consequences of banks' behaviour in a regulated environment that has accumulated
unresolved problems, together with the incentives acting in the new liberal environment
(Ponterotto, 2005). The environment, previously protected from external influences, together
with strict regulation of financial and credit activities, have contributed to the development of
negative phenomena in banking operations. In general, this means that decisions to place assets
were made without taking into account the market criteria for maximising profits. Often, banks
provided loans on the basis of political requirements or the subjective desire of their owners,
sometimes simultaneously acting as customers of the banking services. In such situations, the
banks were not fully established and did not have the skills necessary to function successfully in
an unprotected and poorly regulated environment, created as a result of financial liberalisation.
The previous practice of granting loans created a threat of decreasing the quality of the loan
portfolio and, at the same time, did not allow bankers to monitor debtors promptly and assess the
degree of lending risk (Harrod, 2008). Usually, financial liberalisation is carried out within the
framework of the global approach of macroeconomic balance, financial liberalisation and
structural modification (Senhadji, 2000). As a result of overall liberalisation, the economic
situation of many enterprises has deteriorated, and the total of amount of resources used to repay
bank loans has reduced. In the course of reforms and the implementation of stabilisation plans
that are often connected to financial liberalisation, banks have changed the way monetary policy
is implemented. These policy changes have significantly affected the rate of interest change.
Also, the role of direct delivery of credits among banks has decreased and the meaning of
indirect tools of influence on fluidity in the economy, such as operations in the open money
market has increased. Thus, in order to achieve profitable targets, banks often vary their interest
rate.
In the progression of macroeconomic stabilisation, further restrictions on economic policy have
also been introduced (Berg and Krueger, 2002). These modifications have, in turn, decreased the
possibility for banks to apply for other resources, such as primary loans from the central bank,
and short-term financial resources purchased in the e-market. Moreover, the cost of obtaining
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these assets is increasing. These factors are primarily associated with the changing interest rates
and thus influence the profits and financing function of the economy.
At the same time, the situation is further complicated by the fact that debtor companies
themselves are feeling the needs to limit economic and financial policies. As an outcome, the
liquidity crisis can provoke a wave of non-payments, as debtors lose the ability to fulfil their
obligations (Cojocaru and et al., 2016).
A side effect of successful stabilisation programs is a high level of market interest rates, which
are established, in particular, due to the accelerated inflation rate as compared to the expected
decrease, as well as the appreciation of the exchange rate. In the latter case, the situation for
enterprises that produce goods destined for export deteriorates, since their competitiveness in the
world market falls. Exporting enterprises in Tajikistan have been forced to adjust to the new
conditions by increasing efficiency and the sales growth of products inside the country or
otherwise they could face financial problems, raising the risk for banks’ lending to these
enterprises (Elsherif, 2016).
The interest rate is one of the critical factors in encouraging the liberalisation process within the
financial sector. When interest rates are increased, it leads to an increased refinancing rate and
thus, banks have to pay higher costs to manage their resources. The increased interest rates also
affect debtors in a negative manner. When such situations occur in Tajikistan, investment
projects promising a high income, despite the increasing interest rates, resort to commercial
banks (Fletcher, 2017)
The negative impact of fluctuating economic policies and the refinancing rate in Tajikistan is
changing the value of interest rates reliant on the loan reimbursement stage. In the course of
liberalisation, the differentiation among the interest rates for both short- and long-term loans,
which are of great significance for banks, usually decrease. In Tajikistan, interest rates are
differentiated on the basis of loan terms. Hence, commercial banks are able to generate profits by
transferring short-term liabilities (deposits) to long-term assets (loans) (Lane, 2018). Interest on
deposits, mainly short-term through administrative limits, are set at a much lower level than
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interest rates on loans granted for a longer period. In a number of countries such as the UK and
USA, as a result of interest rate liberalisation, the possibility of easy profit-making in this way
has diminished, as the cost of seeking financial resources has increased and it has become more
problematic to set high interest rates for the use of credit (Macit, 2017). Banks find it difficult to
counter the negative impact on interest rates. Typically, bank liabilities are sufficiently liquid
because they represent deposits that are not limited to a certain period, and banks can quickly
lose them. In contrast, assets have significantly less liquidity. The credit obligations of
borrowers, as a rule, can only be sold to other entities with large losses. The severance of
contractual credit relations, in turn, is associated with additional costs in the form of penalties
(Turk, 2016).
Financial liberalisation leads to increased competition between banks. Therefore, they are forced
to both reduce the cost of finding resources and to resist competitors in their use, and as a result,
profit decreases. The banks’ liabilities are affected by competition from other financial
institutions, both domestic and foreign, that have access to the banking market. The situation for
banks is complicated by the fact that enterprises themselves can quickly inform others about their
financial situation, which allows them to directly establish links with the owners of financial
resources without resorting to the help of banks. As a rule, enterprises that are able to seek non-
bank financing sources are the best customers, and for banks, their loss means increasing the
level of their credit portfolio risk.
1.2 Research Problem
The main research gap that exists is the idea that the impact of the interest rate on banking sector
is highly. However, it has become difficult to identify whether the interest rate has changed due
to liberalisation or not. Consequently, this is the gap that has been identified. However, for
research to be carried out on this, is not sufficient to find out fluctuations in the interest rate.
Financial liberalisation is very difficult to measure, because economic fluctuations are beyond
the control of any financial institutes. Hence, this has become a major issue in the banking
industry, as fluctuations in the interest rate cannot be monitored and measured (McKinnon and
Shaw, 1973). National governments or finance ministries have to keep close eye on interest rate
5

fluctuations, but this is a very difficult task that affects the entire banking industry to a great
extent.
1.3 Aim and Objectives of the Research
Aim
 The aim of this research is to analyse the impact of the variation in the interest rate on
commercial banks after accession to the WTO, with reference to the case study of
Tajikistan.
Objectives
 To determine the relationship between the interest rate and commercial banks in
Tajikistan.
 To examine theories, models and analyses in order to investigate the fluctuation in the
interest rate.
 To analyse the impact of interest rate liberalisation on the financial system of Tajikistan.
 To compare the interest rate and liberalisation in Tajikistan with neighbouring countries.
1.4 Research Questions
 Q1 - What is the ongoing concern regarding interest rate on the commercial banks in
Tajikistan?
 Q2 - What are the relative factors causing the fluctuation in the interest rate?
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 Q3 - How does interest rate liberalisation impact on the financial system?
 Q4 - What are the recommendations to guide banks to achieve interest rate stability?
1.5 Research Hypothesis
 H0 - The research hypothesises that there is no significant relationship between interest
rate liberalisation and banks’ performance in Tajikistan.
 H1 - The research hypothesises that there is a significant relationship between interest rate
liberalisation and banks’ performance in Tajikistan.
1.6 Justification for the Research
This study will concentrate on different prudential regulations in the financial sector. It will place
emphasis on the level of interest rate fluctuation and its impact on the entire financial sector.
Furthermore, it will attempt to understand the factors that impact on the financial systems of
developing countries. In addition, this study will examine how interest rates are determined, and
how this impacts the banking sector. The study will also explain how the interest rate is
controlled and how it leads to improvements in economic growth. In addition, this research will
help to analyse various kinds of liberalisation components that can help in monetary control.
1.7 Brief Description of the Research Methodology
It is necessary to apply different research methods in order to gather relevant and precise data. In
this research, econometric methodology is used, and various statistical tests are applied to
establish the mean, mode, median, etc. In addition, this research undertakes primary data
collection by means of questionnaire and interview. Furthermore, McKinnon and Shaw’s
hypothesis research methodology is applied. Additionally, the data is analysed using SPSS.
Hypotheses are framed and tests are applied.
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1.8 Outline of the Thesis
This thesis is divided into several chapters. The first chapter provides an introduction to the
thesis, the topic background is discussed, and the research aim, objectives, rationale, hypotheses
and problem statement are all framed. The second chapter contains a review of the literature to
develop understanding of the subject matter. The literature review places particular emphasis on
various research and expert views related to financial liberalisation and associated government
regulations. Chapter Three covers the research methodology, in which various methods that can
be used in any kind of research are explained, and it also specifies and justifies the chosen
method used in the current research. This chapter also explains what type of study it is and
defines the data collection methods that are used to answer the research questions. The fourth
chapter contains an analysis of the data, where the research findings are evaluated in a qualitative
manner. All the details are presented in a systemic manner so that valid conclusions can be
drawn. Chapter Five presents a discussion where literature review and findings of this research
are combined to further evaluate the topic. The final chapter presents the conclusion of the
research and provides recommendations for future research.
1.9 Definition of Terms Used in the Research
Interest rate: defined as the amount paid per period, which is the proportion of principal amount
or the amount which is borrowed, lent or deposited (Shaofeng, 2017).
Commercial banks: financial institutions that perform and regulate financial operations and
accept deposits, manage lending and accounting services, and other transactional operations.
Commercial banks also assign certificates of deposit and savings to individuals and organisations
(Alotaibi, 2015).
Financial liberalisation: refers to the removal or elimination of government ceilings or
regulation of interest rates, and all other attributes of financial intermediaries (Zhang, 2018).
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Refinancing rate: the minimum bid rate and can be defined as the interest rate which is paid by
commercial banks when they borrow money from the European Central Bank (Kothari, 2018).
Liquidity: can be described as the extent up to which an asset can be sold or purchased in the
market at its intrinsic value. Thus, liquidity refers to the ease of converting an asset into cash
(Bun, 2018).
Fluctuations in interest rate: rapid changes in interest rates are known as fluctuations. These
fluctuations are the result of inflation, variation in supply and demand, and economic stability
(Aid, 2019).
Interest rate stability: for the stability and better functioning of interest rates, it is necessary that
changes in interest rates are smooth so that financial stability can be promoted. The reduced
volatility of interest rates has a direct impact on the solvency of commercial banks (Lu, 2018).
Fiscal policies: these are known as the policies which describe the utilisation of government
expenditure and revenue collection so that economy can be improved (Gonzalez, 2017).
World Trade Organization (WTO): an intergovernmental body that regulates international trade
between countries (Smart, 2017).
Financial repression: the policies through which government and regulatory bodies can enhance
domestically held debt and tax income (Siddiqui, 2019).
Foreign exchange trade: the global decentralised market for the trading of currencies. Through
this procedure, currencies are bought, exchanged and sold at fixed prices (Verdiyeva, 2018).
Redistributive economy: defined as an economic system in which a substantial share of wealth is
mobilised under centralised administrative control and out from the common population
(Shaofeng, 2017).
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Gross domestic product (GDP): the monetary measurement that describes the value of goods
that are produced in a fixed time period in a given country (Alotaibi, 2015).
Marginal efficiency of capital: the discount rate which equates the price or monetary value of
the fixed capital asset with the present discounted price of expected income (Kothari, 2018).
Depreciation: refers to the reduction or decline in the monetary value of an asset over a certain
time period. The cost of the asset is allocated to the time period over which it was in use (Aid,
2019).
Amortisation: the process or method of paying off debts or loans through regular payments. It is
used for both loans and assets (Bun, 2018).
Accumulated capital: defined as the increment in the value of assets by the means of profits or
investments. It motivates profit so that initial monetary value can be increased (Zhang, 2018).
1.10 Scope of the Research
The scope of the research is to analyse financial market from regional or the national perspective
and evaluates the financial market of the Republic of Tajikistan after accession to the WTO, and
how financial reforms are affected in economically similar countries. Also, a set of significant
internal and external relationships of financial market segments that figure the direct impact to
minimise the deformation of the economic role of the financial market.
The scope of the research is devoted to the analysis of interest rate liberalisation and can be
divided into four areas:
 A quantitative assessment of income from interest rate liberalisation
 The political and economic reasons for implementing interest rate liberalisation
 The impact of financial repression on the growth of the economy
 Optimality of interest rate liberalisation.
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The study examines quantitative estimates of income from financial institutions and their
significance for public finances. For example, Reinhart (2008) notes that even with moderate
inflation, interest rate liberalisation often leads to maintaining the real interest rate at a negative
level for a long period of time. De Melo (2002) also claims that the transition to financial
liberalisation leads to significant losses in budget revenues and requires budgetary reforms. As
for modern developed countries, measures such as the nationalisation of the funded part of the
pension system and the increase in the share of government bonds on the balance of commercial
banks have allowed them to avoid defaulting on public debt.
One of the most extensive area of research on banking interest rate liberalisation is an effective
way of tightening financial regulation on economic growth. Fry (1996) notes that such a policy
ensures financial stability and avoids a negative impact of a financial shock on the growth of a
country and its economic conditions.
The main contribution of this work will be focused on the optimal policy of financial
liberalisation. This problem is considered in the literature in the context of the government
receiving inflationary tax and optimising budget revenues in conditions of income tax evasion.
The subject of research is that developing countries are characterised by a low level of financial
development, tax evasion and monetisation of budget deficits. It is not assumed that financial
liberalisation is associated with inflationary financing of the budget deficit or a decrease in the
efficiency of the financial system. The redistribution of financial resources between the private
and public sectors does not make the work of financial intermediaries less effective. Thus, the
model is more in line with the situation typical for developed countries, which have shifted from
the financial crisis of 2007-2009 to fiscal stress. If we consider financial reform as an implicit tax
on the financial sector, then the problem of optimal taxation arises. Among other things, this
study answers two questions: firstly, whether financial liberalisation is an element of optimal
taxation, and secondly, whether financial liberalisation and explicit taxes are perfect substitutes.
It is also necessary to consider the currency market of Tajikistan and the interrelations and
interdependencies arising in the process of its functioning, taking into account interest rate
liberalisation. Therefore, is the process of regulating the aggregate of economic relations
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regarding the formation and implementation of the monetary policy of Tajikistan taking into
account financial liberalisation and strengthening the functional interrelationships of the currency
sector of the financial market with other sectors?
1.11 Limitations of the Research
The study has been effective in looking at the role of fluctuations in interest rates on financial
systems. The most significant limitation of the study is in respect of the data collection. Different
commercial banks have different interest rates and thus, it is very challenging and complex to
interpret the impact of varying interest rates. Banking stability is considered as a major factor
that affects their ability to manage interest rates, and primary and secondary sources are used to
analyse this research area. However, there are several limitations associated with this.
Interest rate variations can be very sudden and unpredictable, thus the use of sources from the
past few years can affect the relevancy of the findings. In this research, primary data is collected
through questionnaires, and interviews are also conducted but due to budget limitations, the
sample size was kept relatively small. The data was gathered from different organisations and,
therefore, variations can occur in data collection and the accuracy and integrity of data can also
be affected.
1.12 Theoretical Background
The study focuses on identifying whether financial liberalisation has an impact on banking
sector. Also, it analyses the economic conditions of Tajikistan and other economies. Here, much
research has been carried out on finding out the relationship between financial liberalisation and
the economy.
The theoretical basis of the research is the scientific works of foreign authors in the field
financial and banking systems, their structure, functions and role in the economic system, as well
as studies of the regulation of the interest rate, and the effective work on the successful
implementation and reform of financial systems around the world.
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In addition, any combination of a market portfolio with a risk-free asset also provides an efficient
portfolio with less risk and less expected income. This approach is macroeconomic, since in it
the main object of study. Next, the difference between the Markowitz and Tobin theory is that
Markowitz emphasised the mathematical analysis of the consequences of the initial data and the
development of algorithms for solving optimisation problems. Tobin also took as a basis the
analysis of the factors that compel investors to form a portfolio of securities rather than keep
them in one form.
However, the origin of the modern portfolio theory was developed by Markowitz (1952), whose
theory states that the problem of portfolio optimization is to minimize the risk at a given average
profitability. Tobin (1958) also showed that the market portfolio, where there is a set of all
securities that available to investor, is effective. In addition, any combination of a market
portfolio with a risk-free asset also provides an efficient portfolio with less risk and less expected
income. This approach is macroeconomic, since it is considered as a major aspect.
1.13 Chapter Summary
From the overview in this introductory chapter, it can be concluded that there are many factors
that influence the financial sector. They are: financial liberalisation and an open economy that
protects against the risks associated with the shock effect of cross-border short-term capital
flows; an effective mechanism to prevent the adoption of undercapitalised financial institutions’
(primarily banks’) excessive risk can be created only through a system of control by the stock
market. Moreover, financial liberalisation decides independently to whom to allocate loans and
determines where to impact economic complications as well as in ways to accomplish goals with
centralised planning and liberalised economic activity. Different commercial banks have impact
of varying interest rates, volatile interest rate fluctuations from both primary and secondary
sources may affect the relevancy. Also, it is summarized that problems of financial liberalisation
occur due to the government and optimising budget revenues in conditions of evasion from
paying income tax. It is also necessary to consider the currency market of Tajikistan, the
interrelations and interdependencies arising in the process of its functioning when considering
interest rate liberalisation.
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CHAPTER 2: LITERATURE REVIEW
2.0 Introduction
2.0 Introduction
This section furnish a critical assessment of the major theoretical approaches which are
used to describe different theme in the literature review section. Therefore, this section, provides
a deep knowledge related to current condition of interest rate in commercial banks in Tajikistan
and then define different theories behind the fluctuation if interest rates in Tajikistan. Moreover,
it also analyse the outcome of involvement rate liberalisation in the financial system and then
define different factors behind the cause of fluctuation of interest rates. Lastly, by supporting
different author point of views, researcher describe the benefits and challenges of accession to
WTO in the banking sector of Tajikistan.
2.1 Current condition of interest rate and associated theories with interest rate
2.1.1 Overview
As per the viewpoints of Barrell, Karim and Ventouri, (2017), the term interest rate has been
defined as the proportion of the debt or loan amount which has been charged in form of interest to the
borrower. Author also state that there is a affirmative kinship between economic growth and fiscal market
and it is so because when the financial market is high, the economy of country also rises and author also
state the relationship between an ability of financial market in order to redistribute capital and degree of
development of the commercial enterprise, in turns, it increases economic growth of country. As financial
development of the country is actually a ratio of size of securities market and credit market to Gross
Domestic Product.
2.1.2 Theory related to interest rate fluctuation
As per the view of Holston (2017) interest rate parity is the approach which works behind
interest rate. It is a no – investing situation which represents an balance state in which the
capitalist will be different to interest rates. This theory is also work on two assumption i.e.
Capital mobility and perfect substitutability from both home and abroad assets. On the other side,
The mechanism of profit making by such commercial banks is explained by the Martin and et.al.,
(2018) in its studies that commercial banks holds the balances of their customers at which they
some amount of interest which is evidently lower than the interest rate they charge from their
customers while lending the money. Addition in the rate of interest rates widens this gap due to
which banks becomes more able to enhance their profitability.
2.1.3 International theory related to Interest rate fluctuation
Shokirov and Backhaus (2020) stated that Neo classical theory is the international theory
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in which the interest rate is stated through legislation of decreasing minimal inferior. This theory
also explain two laws such that intake of a good in high amount which create a affirmative profit,
but on the other side, contentment of extra ingestion is not good as compared to previous
consumption. On the other side, another law state that best status where the ratio of dealing of
products is equal to ratio of minimum substitute of products The ultimate effect of such low
interest rate results into higher productivity through which the total output of the economy
increases.
2.1.4 Comparison of both theories
According to Durdyev and Ismail (2017) Interest rate parity theory is that approach
which differentiate the interest rate between two state is equal to the difference between the
progressive dealing rate and spot dealing rate. This theory show an important character in the
international dealing markets and also copulative the interest rates, spot exchange rate. While on
contrary, Neo classical theory mainly depend upon the classical demand for supply and demand
of capital theory of interest. This rate of interest is also concludes all the monetary and non-
monetary aspect of interest. The ultimate effect of such low interest rate is reflected on the
higher output of the nation which in turn accelerates the profitable growth.
Xie and Han (2019) argued that the IRP model only anticipate that there are endless
finances accessibility which may be further used for monetary system investment that is further
not practical. As a result, this theory also state that when the future and forward contracts are not
available to protection then it did not hold in the real world. On comparing it with Neo- classical
theory, It has also been observed that if interest rates remains high for too many months than it
leads to slow growth rate of business present in economy. In this above mentioned manner,
interest rates does not only affects economy but it also affects individual present in an economy.
2.1.5 Condition of interest rate in commercial banks
In the view of Mehrotra and Yetman (2015), the system of banking of Tajikistan is relatively
weak and under-developed. The banking sector of the nation experienced a setback in the year 2014 when
economic crisis hit Russia due to which it faced many systemic challenges. The country consists of about
16 commercial banks and about 80 micro-finance companies operating and have just one western bank
named as “Access Bank” which is a German bank. The author says that due to lack of big and renowned
banks across the world, the growth of banking system of the country is relatively lower as compared to
other Central Asian countries.
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Essl and et.al., (2019) provides that interest rates are of two types such as borrowing interest rate
and lending interest rate. The charge at which mercantile banks lends money to the public or
organisations is termed as lending interest rate while the charge which mercantile banks accepts deposits
of public is known as borrowing interest rate for banks. Maxfield, Wang and de Sousa (2018) stipulates
that interest is considered as cost for one person while income for the other person. It is basically taken as
an opportunity cost wherein the borrower pay for grabbing the opportunity now instead of foregoing the
same which might costs it higher. Commercial banks borrows which in other words, accepts deposit from
public for which they pay some interest to them, for the purpose of increasing the scope of their activities
related to the investments and earn higher profits for themselves.
Singh and Singh (2016) states that alteration in the interest rates can impact the market in both
favourable and unfavourable ways. Interest is basically taken as a reward for mitigating the risk which is
associated with the non-payment of the money borrowed by people. When the interest rates at which
banks charge low rate of interest, people are encouraged to take more loans and spend on big purchases
like homes, cars etc. It means people who have to purchase house, cars, they are ready to take a loan from
bank because of lower interest charge. This is because people have to pay less interest on the amount they
have borrowed which increases their capacity of spending higher money. This have a positive impact in
the economy as it’s creates a ripple effect on country's economy. Liquidity tends to increase and money is
transferred from household sector to investment sector at a good pace.
Kasenov (2017) in its studies stipulates that farmers and businesses are the major beneficiaries of
such lower interest rates instead of other section of society as stated above. It is due to low interest rates
allows the farmers and businesses in acquiring capital assets which involves huge costs for which
financing is required. Igonina and et.al., (2016) in its research study stated that the country has witnesses
as high interest rate as possible in May 2017 when the lending interest rate was 32.530 % which in a way
significantly affected the entire system. The disposable outgo of the group in such condition decreases
and they are discouraged from getting loans or spending more. The author also stated that the country has
seen lending interest rate as low as possible in May 2002 when the rate of interest was just 13.097%.
Donou-Adonsou and Sylwester (2017) argues that higher interest rates is an opportunity for the
commercial banks their profitability increases in such scenario. This is because financial such as retail or
commercial banks, insurance companies, investment banks etc., holds huge cash in the form of customer
balances and businesses transactions. The author further explains this by stating that rise in the rate of
interest immediately results into increase in the earnings on such huge cash holdings.
Sheremenko, Escalante and Florkowski (2017) disagree with the view of above author and says
that just because the gainfulness of the finance sector is one of the benefit of high interest rates, it shall
not be forgot that high interest rates decreases the capital which is needed by the banking sector and as a
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result, it reduces their productivity as well. The higher savings and lower expenditure decreases the
liquidity and money movement which eventually slows down the growth rate of an economy and there is
a fluctuation in the banking sector as well because there is a direct kinship between commercial enterprise
market and economy growing.
As per the studies of Al-Harbi (2019), Central Bank of the country greatly affects the interest
rates. In fact it is this organisation which lays down a guiding rate around which commercial banks and
their financial institutions have create their borrowing and lending interesting rates. It is the body in the
country which is also responsible for keep the firmness of commercial enterprise system within the
nation. In the view of MUKANOV and BEGALIEV (2018), when the economy is progressing at such a
rate which might result into hyper-inflation, the National Bank rises the interest rates. This is done to
lower down the excessive demand of credit in the economy. The author explains the mechanism that
when the discount rate is higher, it will be a costly affair for the borrowing banks to get funds from
National Bank which in turn will squeeze the demand from customer relating to the loans. Moreover,
Wang, Tsai and Chen (2019) also argued that Lower demand would help the country in bringing down
the inflation rate to a desired level so that economic growth of the nation does not hindered. Also, this
action is required for maintaining the stability of money credit and inflation rate in a country.
Khatat (2016) articulates that when the retail banks or commercial banks borrows from National
Bank at cheaper rate, they are enabled of passing the savings to their customers by the way of lower
interest rates imposed on personal or mortgage loans etc. This leads to development of such economic
environment wherein the customers are encouraged to borrow which subsequently leads to rise in
consumer spending. However, Bougatef (2015) argues that lessening in the interest rate have a neutral
impact on the investment earnings of the customers. The author says that although reduction favours
spending culture in the economy but it also lowers down the income which the customers are earning
from their investments in bank. This sometimes discourages the investors or household sector to put their
money as investments in the bank.
2.1.6 Impact of Interest rate fluctuation in Tajikistan
According to Mogilevskii and Asadov (2018), banking system in Tajikistan is segregates into two
parts namely, National Bank of Tajikistan and second one is commercial banks. The National Bank of
country is the body which is responsible for performing all the regulatory functions in the nation while the
second tier of banking system which is commercial banks are needed to adhered to the regulation made
by National Bank and to grant loans and accept deposit to/from the public which is their prime function.
Also, it is analysed by Bahrami and et.al., (2019) that Tajikistan's rate of interest at which commercial
banks lends money to people has decreased over the month has a positive impact on the business and
agriculture sector which are the two highly contributing sectors of the Tajikistan's economy. When the
17

National bank which is the central bank of Tajikistan changes the interest rate at which commercial banks
lend currency, it has negative outcome upon financial status of state.
Shaofeng (2017) stated that the lending interest rate of Tajikistan is highly fluctuating as interest
rate in June 2018 was 28.940 which increased to 30.210 in July 2018 which went as low as 20.511 in
November 2018 which again increased to 25.351 in May 2017. This reflects the instability in the credit
supply and demand in the country. For instance, Barrell, Karim and Ventouri (2017) stated that the one of
the commercial bank in Tajikistan has balance of about 50 million Tajikistani Somoni on which 1%
interest is given by the banks to its customers. However, the same money have been invested by it in short
term notes or bills on which bank is earning 3 %. This gap of 2 % is termed as the profitability for the
company.The same thing was experienced by the Tajikistan when interest rates in the country crossed the
mark of 30% wherein people limit their expenses and hold back their money as savings. As a result, due
to increase in interest rate, banking sector affects negatively because people did not get currency from
banks and as a result, the supply of money is affected which directly affect the overall economy growth in
negative manner.
MIRAZIZOV and et.al., (2017) states that discount rate is the cost which have to paid for
borrowing wealth from the central bank. When mercantile banks borrow money from the National bank
of Tajikistan, they have to pay interest at the discount rate for the intent of shoring up the short period
fluidness needs of the banks. For instance, the National Bank of the country may increase or decrease this
rate depending upon the circumstances and condition related to economic pace and growth prevailing in
the country. Ahunov (2018) stated that National Bank in Tajikistan is embedded with this responsibility
in the country. One of the most significant power which the National Bank have, which is to increase or
decrease the discount rate in the state. Shift in the gain or decrease in such interest rate have a massive
contact on the building blocks of state macroeconomics, like spending and borrowing power of
consumers. The authors provides that discount rate of Tajikistan as on March 2017 was 16 % which is
lower as compared to 18 % in December 2016. The National Bank of Tajikistan exercised it power and
lowered the discount rate in the year 2017 because of the stagnant or slow pace of country's economy.
This decision was taken by the National Bank as it wanted to make the borrowing of the funds affordable
for the commercial banks so that economy does not get affected significantly.
This was the reason why National Bank of Tajikistan increased the discount rate in the year 2017
to 18 % from the previous year in which it was 17.5 % since the economy was growing at good rate
wherein for taking control over the possibility of hyper-inflation, the National bank chose to increase the
rate so that demand for credit is lowered down for the purpose of stabilizing the economy.
Geraets (2018) in a good economic conditions, people tends to save less and spend more which in
turn increases the demand of the money credit in the system. The petition gets so high that commercial
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banks are unable to meet it and for controlling such situation, the National Bank of Tajikistan rise the
interest rate so that people gets discouraged in demanding excessive credit or borrowing from the
commercial banks. The subsequent effect of such higher interest rate is that cost of products in the state is
balanced which favour the banking system and system of the nation. Hernandez and Vadlamannati
(2017), through its studies suggests that financial system of Tajikistan is quite shallow. This is because of
the fact that country does not higher financial intermediation. The deposit and credit penetration rates of
Tajikistan is lower than other regional economies because of country's disturbed history of banking
system and government's legacy of interfering in the operational decision making which has resulted into
ineffective resource allocations throughout the country.
As per the view of Wu and Xia (2016) the policies related to lending of funds are weak in
Tajikistan, there is need of effective hazard direction in the banking system and weak corporate
governance has altogether resulted into lower productivity from the financial sector in the country.
Moreover, with the beginning of recession period in Russia 2014-2016 made the situation worse for
Tajikistan wherein many of the commercial banks became insolvent. World's major financial
organisations such as International Monetary Fund (IMF), ERBD and World Bank are offering all the
possible assistance to the authorities of Tajikistan for resolving its problems and issues in the financial
sector.
2.2 Theory behind fluctuation of Interest Rates
2.2.1 Background
This section defined different theories and models that work behind the fluctuation of
interest rates in Tajikistan such that it describe Interest rate parity and classical theory of interest
rate. Moreover, it also describe the how the theories creates direct impact upon financial
performance of state and reflect that There is a margin between rate provided by central bank and
lending loans on certain rate by commercial banks is known as spread and it is also profit margin
for commercial banks. Banks are generally free determine interest loans on deposits and on
lending rates as based on fed funds rate and other policies prevailing in economy.
2.2.2 Interest Rate Parity
This theory is also work under two typical types such hat uncovered interest rate parity
which means that state which influence to international dealing risk is unreserved. On the other
side, another aspect is covered interest rate parity which means to that status in which there is a
progressive bid that is used to concealment the exchange rate. In the view of O'Connor (2020)
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Interest rate parity is the theory which is a differential between two countries in an equal of the
differential between the forward exchange rate as well as spot exchange rate. This is also plays
an important role in foreign exchange markets, connecting interest rates and foreign exchange
rates. Therefore, it can be stated that IRP is a fundamental equation that shows the relationship
between an interest rates and currency exchange rates. In the same each parity represents the
best relationship with an implication for future forecasting exchange rates. Then they will
definitely lighten a kinship i.e. Real interest rate parity which describe the real interest rates. This
theory is generally used by many emerging contries to determine the fluctuation in market.
As per Anandan (2018) this interest rate parity theory state or govern the kinship between interest
rates and currency exchange rates. For instance, when one of the state provide high rate of return in risk
as compared to another. At that time, that state who offer high risk, will be liable to let more expensive
prices in future. Hefeker (2018) said that the second force in determination of interest rates are Treasury
Bills which affects long term rates. Longer term loans are of 15 to 30 years fixed interest mortgage loans.
These loans are generally for customer loans who wants to borrow loans for purchasing auto mobiles,
education, purchasing large furniture’s etc. Interest rates on Long term loans are generally higher as
compared to prime rate but decrease than rotate credit charge. These interest rates are not fed funds rate
but rather they follow every time change in Treasury Notes Rates. In which they take highest yield rate
and it depends on notes i.e. if notes are high in demand than yield can be low and vice- versa. In this way
Treasury Notes Rates are been determined for Long term loans.
2.2.2 Classical theory
Cochrane (2016) state that classical theory of interest rate is another theory which is completely
based upon the demand and supply for a capital. Further, under this theory, the demand side of capital is
consist of demand for an efficiencies as well as for consumptive causes. Further, the efficiency of a
capital is also subject to law of variable ration and on the other side, supply of the capital is based upon
the savings and it is somehow depend upon the determination to save the money for society. Therefore,
when the demand for an investment fund is huge as compared to supply savings then the rate of interest
automatically increases and this shows the fluctuation in interest rate within a country. Hence, this is
clearly shows by Stronski (2017) that when the demand of a money is increases in market, the interest
rate offered by the bank is definitely decreases because there is a negative relationship between the
interest rate and demand. Therefore, this is somehow lower down the economic rate of country because
fluctuation in interest rate means people do not invest to purchase product and this in turn not supported
the economic power of a country.
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On the other hand Yiheyis, (2018) said that interest rates also affects economy and individual
person in that particular economy. There is direct impact of interest rates on home loan mortgages where
if interest rates are higher than loan payment will also be higher. It means that interest rates and loan
payments are directly related to each other as it can be observed if interest rates decreases than loan
payments related to house loans. Interest rates also affects inflation rates prevailing in economy. An
individual must be smart enough to examine situation and lock its money in fixed interest loan in order to
stretch more amount of income for himself. It has also been observed that if interest rates remains high for
too many months than it leads to slow growth rate of business present in economy. In this above
mentioned manner, interest rates does not only affects economy but it also affects individual present in an
economy.
2.2.3 How both theory affect country
Bodenstein (2017) said that the banks are the main participants in setting up interest rates on
loans taken by borrowers. Commercial Banks borrow some amount of loans from central bank on certain
percentage and lend these loans to general public on the rate above than borrowed from central bank. In
the same way, Zhao and Wang (2017) state that these interest rates are been set by setting up certain rates
as per reserve requirements and buying and selling “risk- free” rates. Interest rates comes under monetary
policies and are intended to influence economic activities in a country. Other considerations which bank
take at time of setting up interest rates are inflation rates, stock market levels etc. In this manner bank
decide interest rates which are to be taken by bank on lending funds from individuals and businesses.
Arteta, and et.al., (2016) said that interest rates theory is generally related to the increase or
decrease in percentage of inflation rates in any country. Any country whose inflation rate increases it is
directly related to the prevailing inflation rates. These terms are mainly related too macroeconomics
because all these are big terms which affects whole economy with slightest change in any inflation rate or
interest rate. Generally, it has been observed that when interest rates are risen, less number of people
borrow money from banks which leads to reduction in inflation rates, in turns it leads to reduction
inflation in country. This theory is the main issue of fluctuation in interest rates which also affected
economy of Tajikistan. In any country, when Government wants to decrease the purchasing power in
country it decreased interest rates and vice- versa. Inflation rates are only main reason which affects
interest rates in Tajikistan.
On contrary, Malkiel (2015) claimed that rising prices rates are only not reason for fluctuation of
interest rates in any country. There are many other reasons because of which interest rates increases or
decreases. It is also depended on request and provide prevailing in the market of Tajikistan. Increase in
supply along with decrease in demand leads market forces to decrease interest rates. In the situation of
decrease in supply combined with increase in demand leads market forces to gain in interest rates.
21

Another cause which impact interest rates in country is reverse kinship between interest rates and shared
prices. Such that when interest rates increases bond prices automatically decreases and when interest rates
decreases, bond prices automatically increases. Stronski (2017) shows that other factors which affects
interest rates are Economic Growth rate. There is minimum economic growth rate above that rate
inflationary pressure starts to increase. In order to keep interest rates under control economic growth rate
has to be under control. Other factor is rising wage rates in Tajikistan also lead to gain in interest rates.
Due to change in wage rates it leads to a wage price spiral which ultimately enhance interest rates
Holston, (2017) said that there are various issues in Tajikistan due to which interest rates
fluctuates in any country. These various issues are Federal Funds rate which are been set up by
Government. These are rates which are been applied by Government on short term borrowings that are
paid by lenders of short term loans. Interest rates in this case are influenced by buying or selling of
securities issued by Government. Government buys more of securities which helps them to inject more
money than lending and this tends to decrease in interest rates. Djanibekov and Finger (2018) provide
their views that while when Government sells off more securities it leads to withdraw more amount of
money from banks and ultimately leads to decrease in price of interest rates. One factor affecting interest
rates in Tajikistan is Unemployment rate i.e. High Unemployment rate leads to high inflation rates in
country that leads to decrease in interest rates. Rise in prices commodities leads to rise in inflation rates
which leads to increase in interest rates in order to control purchasing power in Tajikistan.
According to Zhang (2018) there is substantial rise in interest rates from year 2013 to 2017.
Interest rates in country risen from 5.50% in year 2013 to 16.00% in year 2017. It is observed that there
has been approximately increase of 190% in four years which does not good sign for growth of any
economy. Economy is again leading to same position where country was having 21% of interest rates in
year 2000. It the same increase occurs in Tajikistan than it will lead to again rise in interest rates up to
21%. O'Connor (2020) stated that Inflation report also shows that interest rates are not affecting inflation
rates because it is under control. It also shows that inflation rates are not rising with rise of interest rates
in Tajikistan. In year 2000 when interest rates were high than inflation rates were also affected. Thus, it
can be analysed that the situation which occurred in year 2000 can again occur in Year 2017 which means
that rise in interest rates can also lead to rise in inflation rates. If same situation takes place then it is not
good for Tajikistan because rise in inflation rates is a hint to destructive situation for a economy. Whole
economy is affected if there is increase in inflation rates because it creates problem not only for people
living in economy but it also affects other economies which are related to Tajikistan.
On the other hand Wang and et.al., (2018) said that not only inflation rates in Tajikistan will be
risen but it will also affect other factors such as GDP, exports and imports of country. As per reports,
GDP growth rate has been same and are not increasing as the increase in inflation rates and interest rates
22

in Tajikistan. Percentage of Public Debt has been risen which shows that debt is rising leads to purchasing
power of consumers. Shaofeng (2017) Trade Balance of country has also been gone negative and GDP
Per capita is also decreasing which is not good for any country. These are certain factors that are affected
by increase in interest rates which tends to destructive situation for economy of Tajikistan. Government
should try to increase more of exports against imports occurring in country which will help economy to
keep inflationary pressure under control.
2.2.4 Model behind used in order to know fluctuation of Interest Rates
According to Cairns, 2018, there are different models used in calculation of fluctuation of interest
rates occurring in economy. A theoretical model of interest rates is money market and inflationary rates
rising in market. In money market, inflation rises due to increase in money supply over real money
demand prevailing in market. This approach was given by Milton Friedman where he has taken three
assumptions (Cord and Hammond, 2016). The first assumption is that the velocity and demand of money
in economy always remains same and never changes. Second assumption is that in lengthy score real
results is affected by factors such as employment, capital, technology etc. Third assumption is that the
supply of money can be controlled independently because it is determined by different set of factors. It
was Milton who insisted that central bank has not increased interest rates with compulsion but it was
rather the money because of which interest rates were increased. All interest rates are then adjusted
according to the market expectations.
Kuhrt and Buranelli (2019) also argued that most of the payment in Tajikistan are made by the
bank transfer and payment should be made between two corporates entities using a banking system.
Further due to continuous devaluation of the national currency the demand for loans is also going upward
trend. That is why, high interest rate is consider one of the highest factor which further contribute to the
low financial inclusion. This is further supported by the theory of interest rate in which when the bank
stop offering services to their customers, then the demand of the services got affected in negative way. As
a result, it directly affect the economic growth of a country in negative way. Moreover, if the supply is
high and then demand of the product is low and as a result, the financial market of the country will remain
stable. Therefore, Khatat (2016) also supported with the statement and as a result, there should be
inversely proportional relationship between supply and demand. But bank may provide the financial
services to their customers by analysing the financial market.
On the other hand Keynes (2018) said that theory used by Paul Volker also created 1980-82
recession. Due to high- cost for raising inflation rates led to creation of inflation rates. This shows that
Milton's assumptions were more relevant than Volker’s shocker rule. Milton's assumptions were related to
money supply and demand in long term. It warns that change in currency demand leads to temporary gain
in employment but at last it increases inflation. It assumes that monetary policies are powerful than fiscal
23

policies because fiscal policies only puts main focus on taxation policies. Pond (2018) presented that huge
spendings creates money supply but it creates a deficit which leads to increase in interest rates of
Tajikistan. It also assumes that central bank is more powerful than Government because they are ones
who control money supply in country. Real interest rates does affects inflation rates in economy while
nominal rates does affects inflation rates. Real rates rather remove effects of inflation. Expansion of
money supply leads to lowering in interest rates and vice versa.
2.2.5 Analysis of how fluctuation of interest rates took place
According to Avdjiev, and et.al., (2016) the main role of fluctuation of interest rates took place
because of banking sector and money in an country. It is mainly due to difference between interbank
policy rate and other rates such as collaterized rates, uncollaterized rates. Treasury Bills rates, Pure inter
temporal rates etc. Banks fails to recognize difference between interbank rates and other short term rates
and set them as minimum by 4% p.a. It affects the banking productivity in long run because it affects
policy rates. Fluctuation of interest rates can also be analysed by petition and demand of money in
activity. Shadikhodjaev (2018) shows that if money supply in market is high it means that interest rates
will be lower because of which buying quality of public increases. If currency demand in money industry
is lower which means that interest rates are high which affects purchasing power of general public is
decreased. There is direct relation between money supply, interest rates and purchasing power factors
which leads to fluctuation of interest rates.
On the other hand Jobst (2016) fluctuation in interest rates can also be analysed by investments
done by general public in real estate business or share market. If investments in real estate or share market
are increasing than it means that interest rates have been lowered. It is shown because if interest rates are
lower than only public can borrow loans from banks which leads to ultimately increase in investments.
While investment in these sectors are decreasing than it means that interest rates are been increased by
central banks. Shadikhodjaev (2019) argued that it is also lead to decrease in borrow of loans by public
because it shows that there is less investments in these sectors. Interest rates plays very important role in
preparation of monetary policies and sets up whole equilibrium of savings and investments. Also. Lower
investments leads to lower economic growth rate for Tajikistan and higher investments leads to higher
economic growth rate in near future.
Arteta, and et.al., (2016) claimed that interest rates are fluctuated even because of high inflation
rates occur in a country because higher inflation rates leads to high interest rates. It shows that high
inflation rates that purchasing power of public is decreasing which decreases interest rates to low the
borrow of loans by public to increase their investments. Lower inflation rates leads to enhance interest
rates because if inflation rates are higher than there will be buying quality of public. In order to increase
more buying quality of general public by central bank than it has to decrease interest rates. In Tajikistan ,
24

interest rates have been increased which shows that inflation rates are also been decreased because of
which interest rates were increased by central bank to maintain purchasing power of general public.
Naifar (2016) stated other reasons for fluctuation of interest rates are demand and supply of money in
Tajikistan. These are the above mentioned points because of which interest rates fluctuation took place in
country and this points can help central bank of country to improve their monetary policy in order to
reduce fluctuation of interest rates.
2.2.6 Impact of Negative Interest Rates on implementation in different banks or
financial institutions in Tajikistan
According to Brunnermeier (2016) Negative interest rates are policy in which interest rate value
is negative and is lower than theoretical price i.e. Zero percent. It is new concept introduced in order to
remove financial crisis of country. Negative interest rates leads to high cost for commercial banks.
Negative interest rates means that public has to pay for loans borrowed by them from banks on regular
basis. These is done in order to keep minimum balance by depositors in their deposit account so that it
will banks to lend loans more freely to individuals and businessman. At the time of deflationary people
hold money rather them investing or spending in various business. This leads to price falling due to
decrease in demand by buyers and eventually leads to unemployment. Petrick and Pomfret (2016)
presented that Expansionary monetary policies are set by commercial banks at the time of stagnation in
economy. It is further also observed that if deflationary forces are high in economy than interest rates
lowered to Zero rates will not be enough. The third theory behind negative interest rates are in order to
improve economic growth rate in Tajikistan. Basically, it is applied when all other factors are failed in
order to improve economic growth of country. Reducing interest rates to Zero leads to reduction of costs
for individuals and businesses to borrow more loans from banks.
Wu (2016) claimed that Zero interest rate percentage not always help in improving economic
growth of a country. Many times it has also been observed that economic output felled due to Zero
interest rates kept by central banks. At the time of financial crisis it was observed that Zero coupon rates
were introduced in order to improve economic growth but it happened opposite of it and there was fallen
in growth of company. Lower interest rates than Zero Interest rates may lead to shrink in economy rather
than growing in economy. Mogilevskii, R. and Asadov (2018) presente that this impact on profitability of
banks and banks gets destroyed and almost those banks who especially depend too much on customers
deposit to make loans. Negative interest rates is main problem for those financial institutions especially
for those whose main aim is still to attract more number of customers on basis of high interest rates in
order to increase deposits. It is simple phenomenon if a depositor is asking for interest rates he would be
getting and banks tell him that interest rate is Zero or negative than it will lose interest of depositor to
deposit their cash in various financial institutions. Main objective of banks to lower interest rates to Zero
25

or negative is to attract more number of borrowers from financial institutions but in that case they will
lose depositors. In such case negative interest rates lead to high cost for banks and several business
establishment.
On the other hand Claessens (2018) various other consequences of negative interest rates are that
it curtails profit for banks. Main business of any bank is interest rate margins which is most important
source of business of revenue for banks. Negative interest rates means a nonstop decrease in interest rates
margins which decrease in profit of banks. Competition between individual clients and banks of negative
interest rates is only profitable to banks that too in some cases while in other cases it is disadvantage to
individual client. Naifar (2016) reflected that If individual clients are not satisfied with policies of clients
than it will be problem for bank themselves because clients may remove their accounts from banks. At
this point bank has to not only face high cost of negative interest rates but it has to also face problem of
removal of bank accounts by depositors. Thus, there be a two loss for source to bring destructive interest
rates in financial markets. The other reality of negative interest rates is creating uncertainty in financial
markets. In such a situation insurance companies gets relatively advantage because mortgage lending
business and scarcity of investment opportunities leads for investors leads to further problems in
exacerbation.
Drechsler, (2018) said that when sometimes, there is a negative interest rates then in future it will
definitely affect the banks also. The other profits in implementing negative interest rates are additional
revenues in trading business. It means that lending loans lead to increase of profits by lending more loans
to businesses and individuals. It also lead to increase in demand of hedging or a stronger sign for bringing
stability in financial centre. It causes up heal in political parties because they need more amount funding
for their parties. At this time bank provide huge loans without even having authentication of accounts. It
has been very diplomatic that low interest rates leads to system development or not. Djanibekov and
Finger (2018) justifies that it has been observed even if low interest rates led to positive economic growth
rate but then also it lead to very slow growth rate. One such successful example of negative interest rates
is in year 2017 in US where Federal Reserve targets its interbank rates to increase and just expressing its
intention to increase its rates. This policy of increase in interbank rates leads to increase rate at
international level This was happened at time or elections held in US as he promised to improve fiscal
policies in order to increase interest rates and inflation rates in country. In this way, negative interest rates
also leads to some of positive aspects of bringing interest rates below zero rates.
On the negative side Tan (2016) again claimed that negative interest rates are not best for
country's financial performance and it does not lead to improve in economic growth of country. Banks
profits shrinks and also it lowers down trust of public from banks or financial institutions. Also,
borrowing costs of banks have been increased due to penalties imposed by central banks to commercial
26

banks. Commercial banks responses by cross- subsidizing both losses and lowering profit margins for
banks by charging high payment transactions fees from clients. This high payment transaction fees can be
profitable for banks but it is not beneficial for clients because they have to pay high charges on payment
transactions.
So, Sagynbekova (2017) explain that it may create problem for banks if clients start to lose their
interest in banks and it may also lead to removal of bank accounts by customers. The other main reason
for unsuccessful of implementation of negative interest rates is to lend loans to any person there who
comes for borrowing loans. Banks even lend loans to person who might default in payment of principle
and interests in nears future. This is also one of negative point that can affect banks working and may
cause them huge loss because of default payments by clients. Thus, in such situation banks should duly
take care about their payment that they will be paying back principle and interest rates or not. On the
other side, Igonina and et.al., (2016) also state that steps should be taken by banks to keep proper
adequate amount of capital in banks are BASEL norms which help in knowing capital requirements in
proportion to risk weighted assets. Banks can also use these norms in order to know optimum requirement
of capital that is to be required by banks for lending leans to general public.
Abdullah (2015) said that negative interest rates are having both positive and negative aspects in
banks at the time of implementation of negative interest rates in banks. If negative interest rates are
having numerous of advantages to banks by lending loans to public than on other side it is also having
numerous of disadvantages such as increase in borrowing cost of banks, default payment risk etc. Other
negative aspect of negative interest rates are that it lowers Government borrowings and it also lowers
credit ratings of country. Quinlan and et.al., (2019) explain that Alteration in interest rates also enhance to
threat in share market, real estate bubble because of less investment in such sectors. These leads to
increase in more negative side of bringing negative interest in banks of Tajikistan in order to remove
financial crisis of country because it may create a havoc. It may be possible that it may remove problem
for banks but it is not suitable removing big problem of financial crisis for whole economy. Thus,
Tajikistan should properly examine scenario of whole economy present in country and then only take
decision that whether to implement negative interest rates or not and what will be its impact after
implementation on whole economy.
2.3 To analyse the impact of interest rate liberalisation in the financial system of
Tajikistan.
2.3.1 Briefing
Interest charge can be expressed either in form of annual percentage basis or as specified of the
loan amount which has been outstanding. With the help of liberalisation and globalisation of the world
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economy, it has benefited many business organisation in gaining competitive advantages by expanding
their business operations to the international market across the globe. As per the view of Kim, Sanaev and
Babakholov (2018) liberalisation of interest rate is a method in which the monetary authority relinquishes
or delegated some of its power or control related to setting or manipulating rate of interest thereby
allowing the market forces the power to determine interest rates accordingly. Through Interest rate tool, it
enables the financial market of the economy in making proper and effective allocation of its resources.
Also, it ensures measures to be undertaken related to controlling, monitoring, directing as well as
managing of cash and capital flow thereby optimising the capital allocation process. It provides a balance
between the financial allocation systems of the economy.
On the contradictory part of both Bruno and Shin, (2015), they argued that Interest rate is like a
price rate which is having the capability to perform rationing function thereby undertaking allocating
process of the limited supply of all the financial resources in number of competing demands for such
resources. Because of liberalisation made in Interest rate, many commercial banks of different economies
has to face difficulties and adverse situation in managing their banking as well as financial activities. In
case of political colour, commercial banks have to face problems including poor and ineffective
management, lack of financial knowledge, lack of risk awareness, low environment related to excessive
profits. Under such business or financial environment, there has been a high increase in the level of
competition among all the banks. Cairns (2018) also argued that in such competitive environment, the
bank competition has been mainly related with making limitation in respect of mastery of deposits, loans,
competition in context of non-price it has created high negative impact on the performance of banking as
well as financial institution. Due to such interest rate liberalisation, it has resulted in not so strong overall
competitiveness of commercial bank along with the existing services phenomenal.
2.3.2 Interest rate relaxation relationship with the financial system
Caballero, Farhi and Gourinchas, (2017), states that with the introduction of liberalisation in
respect of interest rate mechanisms, its main objective is to provide commercial banks more freedom to
perform or act in respect of pricing of their loans, deposits so as to compete with every commercial bank.
Also, it has been aimed at bringing improvement in the overall efficiency of bank for promoting
economic development and growth thus making economy more competitive and strong. As per the view
of Jelilov, Waziri and Isik (2016) to maintain adequate as well as fine balance between the existing
competitive environment, refuge and condition of the whole banking system, the regime has to adopt
effective and cautious approach in relation with the interest rate liberalisation process. At the time of
several different stages or methodology of such liberalization, all the mercantile banks were get complete
quality to set down all the interest rates of a loan. After the process of relaxation of interest rate was
realized, all the mercantile banks has the power to gain full authority.
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Drechsler, Savov and Schnabl, (2018) disagrees with the statement that though there are some
benefits of liberalising interest rate in the economy, it has come up with some negative implications as
well. Prior to the liberalization of interest rate, all the dominant and profit making banks are not able to
exercise their market power so as to extract revenue in form of rental value as charged from their users
because the interest rates were already resolute and specified. Pond (2018) shared their views that all the
commercial banks are having thought of either raising or lowering down the amount or rate related to the
retail deposit rate, lending rates. It has been set to almost the level same as considered when the change in
the rate of policy has been announced. From this situation, it has been assessed that the banking system
structure of Tajikistan is highly concentrated. All the dominant banks are having more power and full
control over which has been used in negative manner for seeking more benefits out of it for own growth
and profitability aspect.
As per the thoughts of Du, Tepper and Verdelhan (2018), the relationship among the interest rate
liberalization, behaviour of banks and process related to the financing of business of small firms has been
considered and studied from decades for analysing its impact on the financial system of Tajikistan. On the
other side Kasenov (2017) stated that banks and financial institution lends their capital resource amount to
the bigger corporation as well as business firms with the objective of gaining maximum interest amount
out of it. Their main objective behind lending of capital amount to such big firms is that these firm are
having good credit score i.e. their credit information is very much transparent as well as credit and trust
worthy among the market place. Thus, banks finds such big firms as low information searching cost
objectives with high trustworthy benefit. The another reason for providing financial assistance to such big
corporation is that their financial as well as liquidity position is sound and strong enough to repay all the
amount which has been taken in form of debt or loan. Also on the other hand, the cash flow of such big
business organisation is more stable and effective which provides assurance to lenders or financial
institutions that no credit default will arise on part of these firms.
As per the arguments made by Gust and et.al., (2017), it has been noticed that Interest rate
liberalization may not be able to produce the expected benefits out of accounting as well as business
transactions in case when the timing, pace and sequencing aspects are off or not in line with the set
defined procedures. All such aspects needs to be determined with the help of degree of macroeconomic
factors such as stability, the banking conditions and state enterprise sectors. Furthermore, Macit (2017)
state that the capabilities of central banks should be evaluated for ascertaining all the benefits and
limitations it has been facing. The impact which the interest rate liberalization process has brought to all
the commercial as well as dominating banks can be defined under the category of the impact made on the
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seller side of the market with the objective such that all the impacts on small firms are defined and known
as the impact in context of the buyer side.
As per the Memmel, (2017) study which has been conducted to determine the effects of
reformation of such policy from the perspective of buyer sides. By narrowing down of the interest rate
gap, it will force all the banks to lend or provide their money in positive manner to its customers so as to
maintain their revenue. It is related especially to the targeted small firms which are having capacity to
provide high revenue amount to such banks and vice versa. This will provide affirmative contact on the
needs of customers as well as the small firms as they will be better satisfied with such reforms and policy.
Guthmann and Fill, (2020) provides their statements in favour of liberalisation of interest rate and
its effect on the financial system in Tajikistan. The benefit which is expected to be received from the
process of liberalisation of interest rate having main focus on the liberalised capital account is to
undertake investments in excess of domestic savings levels and economic as well as financial growth.
The policy of its relaxation had come up with the positive effect on transmission of the monetary policy
as followed by Tajikistan. On the other side, Maxfield, Wang and de Sousa (2018) stated that all the
policies related to the monetary transmission has become more effective after adoption of policy of
liberalization of the interest rate due to improvement methods as present by the government and tough
market contest in the finance industrial sectors, newly formed home banks and non-banking business
organisation of that economy. The procedure of interest rate alleviation is almost similar and related to
the procedure of deregulation of the interest rules thereby having focus on both, and adopting gradual as
well as cautious approach so as to hold the firmness and development of the business enterprise scheme
of Tajikistan.
On the other hand Jelilov, Waziri and Isik, (2016), disagrees by saying that for determining
adequate and relevant sequence of interest rate liberalisation, financial or banking institutions authorities
are required to distinguish transactions taking place related to loan and deposit one but also has to make
difference between retail and wholesale transactions. By adopting early liberalization of interest rates in
respect of wholesale transactions has becomes critical aspect in case of reforming of the monetary policy
for the economy. It thus facilitates the development of an interbank market economic indicators which
includes commodity prices, exchange rates, yield curves etc. thus studying impact which liberalisation of
the interest rate system has made on the financial system of Tajikistan. Due to speedy liberalisation
process in when banking institution facing issue of lack of expertise at management level which leads to
decrease the financial sector and affect the overall economy. Also Pond, (2018) stated that when the
process of liberalisation is in smooth way then system of the state will not affected in affirmative manner.
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On the other side, when the process of liberalisation is increases, then it will definitely leads to reform the
policies regarding to financial system of Tajikistan.
As per the ideas provided by Liu, Wang and Xu, (2017), related to Interest rate liberalisation is
that bank which sell the services of different commercial as well as financial institution, thereby having
significant effects on the medium of exchange argumentation sending. To maintain interest rate
liberalisation on good tack it is very much important to have close and good cooperation among all the
monetary authorities, government agencies, department who are responsible for bringing constitution
changes in the real body of the Tajikistan. Tan, Ji and Huang, (2016) provides demonstrations related to
both the theoretical as well as empirical aspects with the aim of depicting that the activity interest rates
are more delicate to alteration the charge and then the policy is decided and thus is less reactive to all the
open market operations. The activity of interest rate liberalization as carried on by the financial
institutions have power and full control in relation to charge or set different pricing options for their own
financial products. Moreover Anandan (2018) stated that the process of setting price of its deposit
and loan by the commercial Banks. Commercial Banks having power only for making a reasonable
pricing of the loan amount as an outcome of which the liberalization of the interest rate will be realized.
In respect of which Waemustafa and Sukri, (2016) makes comments by stating that by adopting effective
monetary transmission mechanism, the economy of Tajikistan can have effective monetary policy
reforms for smooth functioning of its financial sector. The interest rate pass through is considered as the
first communication performance which has to be modelled for better performance.
Also it has been found Nishikawa (2015) by that to be one of the strong transmission channel
which supports advanced economies and its development. To maintain and promote terms firmness,
related to such policies have affected the aggregate demand and inflation thereby affecting the financial
system of Tajikistan. For effectual running of monetary communication transmission it has be
accompanying to the interest rate. Thus with increase in the interest rates, it can leads to appreciation in
the value of local currency thereby creating effect on the exchange rate pass through. The dealing rate
transmission of monetary transmittal has been found to be one of the major channel of monetary
transmission in the whole transition economy of Tajikistan which has provided beneficiary transaction to
its financial sector.
However, Wang and et.al., (2018) argued that in the financial sector of the economy liberalizing
interest rates is considered as most important cause. It helps financial system thus allowing all the
banking as well as financial departments to set policies and reforms. On the other side Arteta and et.al.,
(2016) also stated that power has been allocated for developing the financial markets in better manner so
that credit facility can be allocated which may be used by the users. Therefore, by developing a
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liberalisation policy, the foreign trade with other countries are also increases with a regular import and
export facilities. This is used by the highly developed countries in order to maintain the competition
within other countries and it may also leads to lower down the tax rates and less restriction on both
domestic as well as foreign market as well. Even the liberalisation process also offer the opportunities for
the sector in order to compete internationally and also contribute to the GDP growth to generate the
foreign exchange as well. Further, Barrell, Karim and Ventouri (2017) argues that there is a
increase demand of e-banking in Tajikistan and by implementing the same, the country's economy will
also increases and as a result, it may leads to provide better working as well as helps to sustain in the
competition in a market as well. As per the explanation made by Wang, Tsai and Chen, (2019) related to
macroeconomic environment and financial sector, it has been assessed that economy of Tajikistan is very
small and vulnerable to shocks such poor business climates. The economy of Tajikistan heavily relies on
import functions with its exports having a very narrow base. Tajikistan economy is commodity driven
including aluminium, cotton, gold etc. on the large basis. When it comes to import and export functions
of Tajikistan, liberalisation of interest rate transmission plays a vital role.
Bech and Malkhozov (2016) stated that the rate of interbank lending accurately reflects situation
in context of both the short term capital supply and demand which depicts most representative interest
rates among the financial markets of the economy of Tajikistan. Thus, it is the main part of interest rate
liberalization that interbank lending rate has become criterion of interest rate liberalization for assessing
its impact on the financial system of the economy. On the other side, Bougatef (2015) explained that the
monetary authorities and agencies are having full control or power related to the interest rate in the
indirect manner of which one cannot make use directly for making control over the market interest rate.
The central bank on the other hand is having indirect effect on the interest rates which can use of three
major policy tools broadly named as open market operations, legal deposit reserve, re discount rate. All
these policy tools are having ability to indirectly make adjustment in the interest rates and to further
provide guidance related to the market interest rates.
On this part Khalid, Shehzad and Naqvi, (2019) argues that for avoiding or mitigating unstable
flows of deposits between the financial institutions, it is essential to not to wait till all the lending rates
becomes fully liberalized at the beginning so as to liberalize rates on different deposits types including
large time deposits etc. By making early liberalization of rates on the large deposits, it can be justified
with the help of fact that one can make efforts for competing on increasing basis with the money market
instruments such as treasury bills or repurchase agreements. Also, it has been argued by Nwafor, (2018),
that financial deregulation and liberalisation activities can have destructive outcome on the running of the
financial system of Tajikistan. Thus it generate the direct relationship between banking sector and
32

financial institutes. This is done by setting the ceiling amount on the interest rate deposits, which the
government has supported to make gain in the motive risk activities by making harmful choice. Moreover
it is supported by Bruszt and Palestini (2016), With the help of financial deregulation and liberalisation
there can be a lessening in savings thus deed change in the investment amount. Also, with the decrease in
the level of investments it can bring a decline in the level of employment thus bringing economic
stagnation in Tajikistan.
As per the statements provided by Gaddis and Pieters, (2017), increasing bank competition and
use of different banking techniques and technology also helps to improve the efficiency to reduce the
funding fees. Also, emphasis has been made on making more efficient and proper use of fiscal origin as
preconditions for creating sustainable means for bringing in more economic growth and development of
the country. Interest rates as set down in the economy is known as price of money which is have direct
impact on the costs as incurred or associated with the function of financing of the requirements of the
working capital. Also, it lays indirect influence as well on the capital structure of many business
organisations as well as business firms. Deregulation of interest rates viz. Sharpe and Suarez (2015) critic
that To removing of the cap on the deposit interest rates as set down by the authorities can results in
increasing tough and high competition among all the commercial banking industry. Also, it has impact in
form of increase in both the deposits and loans interest rates.
On the other hand Gopalan and Rajan, (2017), all the problems arising are related to too many
regulations as imposed by the higher authorities and high competition prevailing in the market place. As it
is already mention by author that if economy has too many regulations imposed in it, then it can result in
arising of conflict with the competition. Business firms facing constrained in form of regulations have to
bear negative impact or disadvantage when compared to all the other business and market players.
Regulations has also limited the scope and possibility of conducting operations of different types of
financial institutions thereby making high interferences on directly basis with the free competition. As a
result, Smart (2017) stated that this will also help to find the interest rate of liberalisation If there is an
increase in the competitive forces on regular and at fast phase, then it can be considered as a sources of
risk which will have direct impact on the financial system of Tajikistan.
As per the observation made by Nishikawa (2015), it can be said that in the process of financial
transaction every participation is having full power as well as autonomy related to the choice in respect of
number of structure, flexible manner for meeting needs. Also it plays significant role in the formulation
of market equilibrium interest rate. All the financial institutions which are having pricing power in
respect of their financial products and tools mainly refers to the pricing done of deposit and loan by the
33

commercial banks. All the Commercial Banks as well as dominating banks can only make reasonable
pricing for the loans amount and will result in realisation of the interest rate liberalization on its own.
However on the critical note, Alagidede and Ibrahim (2017) argued that the economy which has
been characterized with the factor of business subjugation thus increasing minimal interest rates in
relation to the rising prices would always focuses on increasing its saving and supply of investible
resources in its own economy for the betterment as well as smooth functioning of its financial system.
Also, it results in increase in the productivity of investment because such resources are channelled so as
to protects and have higher rates of return. Furthermore, it has been argued that financial repression can
arises in situation mostly when the economy imposes ceilings on the nominal deposit and lending interest
rates at the rate which is much low level as compared to inflation level rate. Thus, such low real interest
rates makes affect in form of discourage of savings and its mobilization through the fiscal scheme
thereby having negative impact on both the measure and choice of investing and thus influences growth
as well as development of the economy on a large extent.
2.3.3 Relative factors behind the cause of fluctuation of interest rate
Holston, Laubach and Williams (2017) says that fluctuation in the interest rate arises due to a
factor called inflation. The term inflation means an environment in which the terms of goods and services
are increased within in a specific system. This is associated with a concept that as the rate of inflation is
increased or prices of services and goods increases, the purchasing power of the people decreases in the
country. In short, it means cost of living. Inflation have a significant effect on the interest rates which are
predominant in the state and has the capability of fluctuating it to a crucial level. Laubach and Williams
(2016) through its studies states that interest rate is one of the way of through which the central bank of
the country controls the continuous price rise in the economy. The authors claims that for controlling the
high rate of inflation, the rate of interest in a particular economy is increased. The mechanism of this
increase in interest rate is explained by the author in its studies. For example, during high interest rate, the
cost of taking loans from banks will increase which in turn will make the borrowing expensive for the
people as they will have to give high quantity as interest to the bank which will left them with lower
disposable income. Due to such effect, the demand for such expensive borrowing will be reduced and
demand of wealth in the system will also be declined. Kiley (2015) also specifies that a decrease in the
money supply will result into lower expenditure on the goods and services by people. The immediate
effect of such lower expenditure will be reflected in the lower supply for the goods and services. With the
supply being constant and such lower demand, the prices of the available goods and work will fall in the
state and through this lower demand, the inflation would be stabilised in Tajikistan. The author says that
34

there is a complete cycle through which inflation is controlled by interest rates which is fixed by the
central bank in the nation.
Hördahl, Sobrun and Turner (2016) is of the opinion that supply and demand of credit in an
economy largely affects the interest rates. In the context of lending money, increase in the demand of
credit or supply shortage results into rise in the interest rates. For example, commercial banks in
Tajikistan, if facing higher demand for the credit from its customers, it is very likely that interest rates in
the country would go up since the National Bank have to maintain the stability in money supply in the
economy. Naifar (2016) argues with the above author and claims that demand and supply is not only the
sole factor which fluctuates the interest rates in the state. The author says that national money rate is the
factor which affects the variations in the interest rate. National stock rate is that rate which the business
institutions imposes on other financial institution for short term borrowings and loans. This rate is fixed
by the central bank of the country wherein this governing body may decrease the rate for the purpose of
encouraging borrowing in the economy and may increase the rates for limiting the borrowing power of
the institutions for stabilising the money supply.
Arteta and et.al., (2016) provides another factor that cause fluctuations in the interest rates of the
commercial bank in a particular economy. This factor is saving rates. People have a tendency to save a
significant portion of their income for the purpose of meeting their needs in the future. Such savings
determine the interest rate in the nation. For example, when the saving rates are increased, people will
tend to save more as they would be earning higher returns on their savings, and would borrow less. In
such a scenario, interest rates have to be lowered down for the purpose of compensating such imbalance.
Dimic and et.al., (2016) states that saving rates has opposite impact on interest rates when they are
reduced. Like when the saving rates are declined, borrowing becomes the necessity of the process of
consumption in the economy and as a result interest rates are increased by the central bank for keeping
the things reasonable.
Bond market is another reason which is cited by Agapova and McNulty (2016) that creates a
fluctuation in the interest rates. It has been said by the author that bond market is considered as law of
land when someone talks about debt. For example, countries like Tajikistan when issues higher debt in
the name of government, the country has to often make more money for offsetting such debt. The
immediate consequence of such higher debt is gain in the money demand which as a result, makes the
interest rates to go higher. It is through this way that borrowing environment is kept rational in the
country. However, Del Negro and et.al., (2017) disagrees with the opinion of above author and says that
alteration in the cash reserve ratio causes fluctuations in the interest rates of the mercantile banks in
Tajikistan. Cash reserve ratio means that amount of money which the commercial banks have to to keep
with the National Bank. When this authority rises up this ratio, the actual funds available with the banks
35

decreases. This action is taken by the central bank in order to extract out excessive money from the
financial/ banking system. The author states that it is the tool through which National bank keep a check
on increase in the prices and interest rates.
Economic growth of a nation significantly affects the interest rates as articulated by Gelos and
Ustyugova (2017) in its studies. If the country is experiencing good economic time, demand of the credit
will be increased. If the lenders i.e., banks does not have sufficient funds for lending it to the borrowers, it
will have to increase the interest rates for maintaining the stability of forces which are demand and supply
of money in the economy. For example, economic growth rate of Tajikistan in the year 2018 was 7.3 %
which is considered as very good indicator of economic prosperity. In such a scenario, the interest rate
has fluctuated, like it was 16% in the year 2017 which was higher than previous year i.e., 2016. As per the
view of Chemutai and Escaith (2017) the interest rate was increased by the National Bank in order to
decrease demand for the credit borrowing. When the demand falls, a stability in the money supply is
achieved by the nation through which the inflation rate is also controlled. Such a move is necessary on the
part of central authority so that a balance is maintained in the financial and banking system of Tajikistan.
Dong, Li and Yang (2016) argues with the view of above author and stipulates that it is the fiscal
policy which is the reason behind fluctuation in the interest rates of the commercial banks. Fiscal policy
refers to the tool through which the government makes adjustments in its expenditure levels and tax rates
for the purpose of monitoring and influencing country's economy. The author states that in growing
economy, all the businesses requires funds for expanding their operations which makes them to get from
commercial banks and fiscal organization. This results into higher demand for the credit in the economy
and for meeting such higher demands, the interest rates are made higher for compensating such increased
demand. Another author Batsaikhan and Dabrowski (2017) in its studies claims that monetary policy is
the major factor that cause alteration in the interest rate. Monetary insurance is a tool of government
through which it exercise its powers of controlling the money supply in the economy. It is the statement
which comprises action plan taken by government, central bank and monetary system commission of a
country in order to power the quantum of wealth that is required to be supplied in an economy and the
channels through which such money is to supplied. The macro-economic objectives of a nation such as
maintaining inflation rate, liquidity, consumption,, expenditure and economic growth, is achieved through
appropriate monetary policy. For example, in Tajikistan, the National Bank modify the demand of
currency in order to maintain the rising prices in the country. However, Tarr (2016), states that
maintaining over the demand of wealth by the way of monetary policy is ineffective since nobody knows
what quantity of money is actually required in an economy to facilitate smooth flow of economic
activities at any time. Moreover, there is a confusion how banks use this moeny when it is accessible or
changes in the supply and demands.
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Chow (2016) provides that recession is the factor which causes alteration in the interest
rate in the state. During the time of recession where the economy is stagnant, the central bank
makes all the efforts for dealing with this situation. The author says that it is business community
which is affected the most by the recession. Sharif, Purohit and Pillai (2015) presented that for
restarting and reviving the business & economic activities, the federal bank lowers down the
deduction rate, the charge at which banks borrows money from the central bank. The reason
behind such low discount rate is to induce mercantile banks to get finances from central bank so
that they can lend it to the business organizations. The lower interest rates facilitates the
businesses in acquiring capital assets and makes their expenditure quite affordable. The discount
rate is kept low by the central bank till the economy picks up and improve. Moreover, this
directly shows that due to recession there is a fluctuation of interest rates and as a results, the
demand got affected in negative manner and in turns, it may affect the overall economy as well.
However, Sagynbekova (2017) disagrees with the views of above author and claims that
risk of default is the factor which determiners the increase or decrease in the commercial banks’
interest rates. Whenever a bank lends a loan, it always undertakes a risk which is associated with
the non-payment of loan money by the borrower. Those people who have poor history of
repaying the loan are likely to show the inappropriate financial behaviour relating to a new loan.
Thus, for mitigating such risk, commercial banks lend to gain the interest rates on the debt. Such
higher interest rate compensate the hazard which the mercantile Banks takes by lending money
to such people who have records of making defaults in payments. Müller (2018) argues that risk
is the secondary factor which affects the interest rates, the major factors at macro level are
inflation, recession and system development of the state which causes the fluctuations in the
interest rates. For maintaining the balance in the economy, it is very essential to adjust the
interest rates. Supply and activity of the money credit in the economy needs to be balanced so
that economic conditions in the country does not disturbed. Therefore, it is clearly reflected that
risk is consider as a factor which creates fluctuation in the interest rates and as a result, it may
decreases or increase the interest rate, which impact the total economy of the country in just
other manner.
2.4 Comparing the interest rate liberalization of Tajikistan with the neighbourhood
countries
2.4.1 Prelude
As per the views of Zhunusova and Herrmann (2018) easing off the controlling measures
of monetary policies and releasing a sort of control over the market forces. Further, on this
Vercueil (2018) stated that liberalisation of the interest rate may result in becoming a critical step
taken by the authorised monetary authorities. It may lead in increasing the amount of liquidity
within the economy and that may result in highly anticipation of market within the country's
economy. Thus, it may result in increasing the chances of increasing the amount of black money
within the economy. Thus, it is required to study the actual position of the country's economy
and formulate the policies regarding liberalization of interest rates accordingly.
2.4.2 Interest rate liberalisation of Tajikistan with neighbouring countries
Chemutai and Escaith (2017) has view that it is an essential task to be performed by the
monetary authorities of a country to formulate effective monetary plans and policies for the
country. An inefficient plan may result in inefficiently allocation of funds and other financial
resources within the loan market across the country or availability of excessive amount of
37

financial resources within the financial market of the country. Both the situation would lead in
increasing the risk of financial uncertainties within the economy of the country. In addition,
Verdiyeva (2018) said that a country's monetary policies need to be framed while taking into
consideration current situations of the overall economy along with monetary policies of
neighbourhood countries. Formulation of less effective monetary policies as compare to the
policies of neighbourhood countries may result in transformation of financial resources of the
country into neighbourhood country. It would have direct influence over the aligning of an
economy in the global economic activity.
As per the study of Georgiev, Nagy-Mohacsi and Plekhanov (2017) In Tajikistan, the
financial market of Tajikistan got affected due to financial crises 2008. At that time, as compared
to other countries, many national and international government institutions raised the need of
developing effective policies and plans regarding regulation of financial market. It helped in
development of Tajikistan's financial market for multi-years. Further, the liberalisation of
monetary policies also helped in improving the computers and informational technologies within
all over the country by using the financial resources of the country's economy. On the other
hand, as per the views of Gabdrakhmanov and et.al., (2016) as a result, if there is a strict
monetary polices and higher interest rate, the government failed to raise a huge amount of
foreign direct investment within the country. Further, in comparison to other neighbouring
countries, the crisis affected the many neighbouring countries in just opposite way. Thus, it can
be evaluated that monetary authorities of the country are required to maintain effective and
balanced liberalization within the country. It has direct contact over the improvement and growth
of the country.
Kuhrt and Buranelli (2019) says that recently Tajikistan have ,liberalised its interest rates
for bank that resulted in increasing the assets held by commercial banks by 21.3 times as
compare to previously held assets. Further, it also helped in increasing the capital of banks by 7.7
times. Although, due to excessive liberalised interest rate, the economy of the country influenced
in the negative dynamic, it resulted in reducing the GDP rate from 51.6% to 37%. In addition,
share of banking sector in the aggregate capital also reduced from 10.8 % to 6.4 %. It lead in
reducing the growth of finance body in the land. On the other hand, Shaofeng (2017) stated that
by seeing the decrease in the overall economical development in the country, monetary
authorities of Tajikistan improved their strategies and plans for the country. It resulted in
substantial improvement in the overall economy. It resulted in increasing the amount of
investments within the banking sector through which banks gained operational benefits and
became able to improve their performance and increase their share in country's GDP. In addition
to this, it also lead in reduction of the implicit risk of banks.
By studying the reports of World Bank Alotaibi (2015) said that Tajikistan's government
decided to liberalise the economic and monetary policies. It helped in helped the country in
increasing the amount of foreign direct investment within the country. It also helped the country
in becoming one of the big system of the global. On the other hand, talking about the economy of
China, Petrick and Pomfret (2016) said that China increased the controlling measures within the
monetary policies. It caused in slowing down the overall profitable maturation of the country.
Furthermore, due to lack of liberty in the country's economic policies, country also faced lack of
foreign direct investment that slowed down the efficiency of overall monetary and financial
market of the country. Thus, it resulted in making the monetary authorities realised that they are
required to liberalise the overall monetary policies of the country.
38

Lee, Park and Shin (2015) realised that for the purpose of acceleration of development in
the economy, and pursuing the national development agendas, it is required to formulate
effective policies and standards relating to the monetary policies of country. For this purpose,
developing countries like Nigeria, Mozambique, Bolivia, liberalised their interest rate with a
view to improve the amount of public investments in their commodity market. Formulation of
liberalised policies helped these countries in elimination of negative impact of their commodity
market and rising up them from decline in their GDP as well. Liberalisation of policies of helped
Nigeria, Bolivia, Mozambique, etc. in scaling up the amount of public investments that directly
influenced their economic condition positively.
On this, Kim, Sanaev and Babakholov (2018) said that neighbourhood countries of
Tajikistan like China, Russia, increases the interest rates over loan and credits. It resulted in
reduction in the flow of funds and other financial resources within the country. All these policies
lead in strengthening executive’s powers in the other institutions. It helped them in achievement
of their strategic goals and objectives in relation to maintain employed dealings with helper.
Zhang (2018) has view over liberalisation of interest rate that Russia is one among those
economies that have a huge level of influence over economic condition and monetary policies of
Tajikistan. Tajikistan keeps participate in the economy of Russia. It reduces its participant from $
3.8 billion to $ 1.28 billion in the year 2015 as compare to the year 2014. Further, as per the
reports of World Bank, this participant kept reduced further in the year 2016 as well. It also
influenced the export and import market of Tajikistan.
Moreover, Sauvé and Soprana (2018) has a view that in late 1990's the China was one of
the high economy country as compared to other Latin American countries. It also resumed its
sustainable economic growth through advanced economic strategies and plans. Policies of China
involved higher interest rate despite of it substantial capital inflows and demand of credits and
loans remained high in the country. Major liberalisation policies of China were liberalisation of
restrictions over foreign direct investors and external accounts, liberalisation of interest rate in
order to improve the positioning of banking supervision, etc. All these policies resulted in
improving quality of monetary policies and improving the impact of these policies over growth
of economy of China.
As per the views of Kaya and Woo (2018) a country is required to maintain healthy
relations with other countries. As Russia have a great influence over the Tajikistan's economic
development, financial and monetary sector's development depends upon the effective monetary
policies of the country formulated on the basis of monetary policies and plans of Russia. Banking
sectors are one of major factor of Tajikistan having power over the profitable performance of the
land. On this Kothari (2018) said that all major transactions of country's economy such as debt
repayments, foreign direct investments, international payments, foreign exchange transactions,
etc. depends upon the execution of finance body of the state. In order to improve the
performance and positioning of banking sectors, the government is required to set the most
appropriate interest rates to be applicable over the banks. Thus, it can be said that interest rates
set by the monetary authorities of country.
In the view of Bun (2018) there is a good relationship of EU with Tajikistan such that
they both developed a strategy for improving the welfare of population of the republic of
Tajikistan. As there is a weak institutional reform process and by using efficient intellectual and
financial resources which makes it difficult to achieve equal access in all terms. In the meantime,
39

the domestic financial market of Tajikistan suffered from higher amount of foreign investments
in the market that resulted in exploitation of the domestic investors. Therefore, by improving and
getting best financial resources will help the country to get the results or outcomes in positive
manner and the interest rate of Tajikistan also got affected. In this perceptive, Martin-Ortega and
O’Brien (2019) said that Afghanistan is one of the neighbourhood country of Tajikistan that have
a huge impact over the economic condition of it. Moreover, the monetary policy is also framed
by the government of the country which also creates a direct impact upon the money or financial
market of the Tajikistan in the term of foreign investment. Additionally, it also encourage the
domestic investor so that they may invest their excess funds into Afghanistan. Overall, it is also
analysed that as per the view of Cairns (2018) to reduce the negative contact of other country's
monetary policy, there is a need to formulate own policies and plans with regards to stable the
finanial market of Tajikistan so that it may not impact the interest rates and overall economy of
the country too.
Thus, it also have impact over the employment rate in Tajikistan. Study shows that
liberalisation of interest rate has resulted in increasing the economic growth from 49.7 % to 55.1
% in 2015 as compare to the year 2000. It also resulted in increase in the contribution of banking
sector in the from 31 % to 54.6 %. On this Aid (2019) said that with the help of liberalisation of
interest rates, the individuals have been encouraged to make a large number of deposits and take
loans as well. It has resulted in growth of individual deposits to 55.1 % along with increasing
consumer loans to 41.8 %.
2.4.3 Benefits and challenges of accession to WTO in the banking sector of
Tajikistan
As per the views of Xie and Han (2019) WTO is world trade organization which is an
intergovernmental organisation that has been formulated in order to develop different regulations
and laws for monitoring and controlling each type of international business transactions. The
essential role of WTO is to act as a forum for negotiating international trade agreements and
settle down all disputes among members. Further, Arveladze and Smeets (2017) says that in
order to impose effective controlling measures over business transactions of a company made
beyond the geographical boundaries, Tajikistan made a step forward towards accession to WTO
within the country. Besides it, with the support of international trade centre (ITC) the Tajikistan
the accession of WTO ensures smooth running and orderly processing of overall international
40

business transactions. It also results in positively impacting advancing the negotiation process of
the international transactions made by the businesses of Tajikistan.
In the view of Buettner and Madzharova (2018) integrating with World Trade
Organization (WTO) which allows the nations to entirely collaborate with other nations for
reaping in the benefits of globalization. The author stipulates that entering into WTO would
increase the external risks in the context of open market and would decrease the social security.
This means that when the economy is open, more of foreign businesses would mark their
presence in the country as it will be an opportunity for them to explore the benefits of developing
economy. In such a situation, the capital markets would be more prone to the external risks,
fraud and higher fluctuations in the interest rates prevailing in the country. However,
Shadikhodjaev (2019) disagrees with the above author and says that becoming a member of
World Trade Organisation would make the financial and banking sector highly competitive,
which is one of the challenge for the home commercial banks. It is so because the foreign
business organization would gain a substantial share in the market of Tajikistan and would lead
to lead to a situation where less competitive banking firms would leave the field as they could
not beat such highly effective and renowned banking companies.
Sutyrin, Trofimenko and Gubina (2019) articulates that becoming a member of World
Trade Organization (WTO) would not rule out the possibility of disputes and conflicts relating to
trade. The author provides that country would continue to have trade conflicts despite being the
member of WTO. It also states that transfer the private sector into the accession to WTO.
Moreover, as a member of international governing organisation, Tajikistan would have to adhere
to enormous rules and regulations which would be a tedious task for the law making authorities
of the country. This is because they would have to make their laws and legislation which are in
line with the guidelines and framework provided by the World Trade Organisation. However,
ANDERSON and MüLLER (2017) disagrees with the claims of above author and says that
adhering to the rules and laws of WTO would help the country in enhancing its firm
establishment in the financial & finance body. This in turn would assist the banking companies
in attaining the confidence of investors which as a reason would desire to invest more of their
money as an investments in the bank. Such higher amount of money available with the bank
would aid in meeting the demand of the borrowers conveniently. Also, there will not any
material fluctuations which could hurt the economy in any possible way.
In the opinion of Chemutai and Escaith (2017), accession to WTO or becoming a
member of WTO is that this organization has certain trade rules which does not favours the
developing nations. The author states that rules and regulations of WTO may hamper the
development and growth of infant industries in Tajikistan. For instance, Tajikistan being a
developing economy desires of diversifying its economy by investing more in financial and
manufacturing sector but becoming a member of WTO restricts them in doing so. This is because
a protected environment has to be facilitated to the infant industries to bloom which is possible
only through tariff protection. Escaith and Chemutai (2017) argues with the opinion of above
author and stipulates that free trade between the countries and reduced tariff rates across the
members of WTO would make Tajikistan more efficient in the sense that more of exports would
be encouraged in the country through which greater amount of foreign capital could be brought
in the economy. The effect of such exports and international business transactions would result
into higher economic growth in the country. The consequence of such economic growth would
be seen in the lower interest rates, higher profitability for the commercial banks since people
41

would have more disposable income for spending on goods and services. Higher expenditure by
the household sector facilitates the banks in mobilizing the public deposits into capital
investment that eventually leads to higher industrial output of the country. All these things
collectively contributes to the GDP of the nation.
Laruelle and Peyrouse (2015) state that with an implementation of the Worl trade
organization rules, every member of teh country run in the systematic manner and as a result, it
will leads to reduce the inequalities among each nation, though they have different economic
conditions. This was considered as one of the challenge which the Tajikistan has faced by its
accession to WTO. Also, the country has not still obeyed to the policies of WTO which are
related to free trade. The nation has maintained a policy of providing protection to domestic
industries without notifying any of its partners. Kuhrt and Costa Buranelli (2019) argues with the
above author and claims that becoming a member of WTO has strengthened the economy of the
country and has improved the financial system of the nation. Due to the good trade relations with
the countries, the country has been able to stabilize the conditions in its economy in relation to
inflation. Stabilized inflation has directly impacted the interest rates of the commercial banks
which in turn has resulted into higher flow of household income into investment sector which
has facilitated higher availability of funds for industrial development in the country.
In this view Chemutai and Escaith (2017) said that WTO provides guidelines and policies
through which appropriate amount of liberalization can be imposed within the financial and
monetary market of the country. Moreover, it also leads in creation of appropriate competitive
environment among the country along with maintenance of sufficient amount of financial
resources. It also leads to spread the understanding of good practice of rules and regulations of
financial sectors and different international trade practices. Therefore, it can be stated that
accession of WTO in Tajikistan leads to improve the efficiencies of international trade practices
within financial service sectors like banks and other corporations that provides financial services
to their clients.
On the other hand, as per Sauvé and Soprana (2018) at the time of accession of WTO, a
programme was organised in which a training session on “WTO Accessions and their Business
Implications - Lessons from Other Countries” was organised. This session was having a major
focus on the process of WTO accession. It also provide knowledge regarding various benefits
and challenges that are needed to be analysed before implementation of accessions to WTO.
Organisation of this session resulted in spreading appropriate knowledge among all commercial
banks, through which they became able to implement and face all the challenges effectively and
perform build their new policies and procedures in this context easily. Further, as per the views
of Lu (2018) Tajikistan have a view that the accessions to WTO resulted in involvement of
remittance to be transferred through the banking system that is important part in increasing the
contribution of finance sector in the GDP growing rate of the land. Besides it, it also helped in
42

increasing the productivity of banking sector as a whole that leads in improving the chances of
potential growth of the banking sector.
The Georgiev, Nagy-Mohacsi and Plekhanov (2017) said that accession to Tajikistan was
in the year 2013, ITC contributed in the implementation of all complex reforms of this accession
and helped it in building the ability of banking sectors to gain further benefits from accessions to
WTO. It also lead in enabling the banks in making effective contribution in the economical
maturation of the land. Whereas, Gonzalez (2017) has a view that ITC played an essential role in
assisting the banks in making active participation of the banks in performance of negotiation
process of accessions. Along with this, it also helped the banks by providing appropriate
guidelines regarding formations of their policies regarding maintenance of sufficient amount of
foreign investment, domestic investment, commercial loans etc. It also help in improving the
performance of overall banking sector of Tajikistan.
Further, as per the views of Figueiredo and Lima (2017) WTO accession in Tajikistan
resulted in improving the quality of building effective plans and formulation of different
regulations by banking sectors in order to improve the growth of country's economic and
financial conditions as a whole. At the time of accession to WTO, the Tajikistan's government
signed a memorandum contract. Del Negro and et.al., (2017) also states that this contractual
agreement contains details that provides proper guidelines to implementation of economic
reforms, trade development and investment along with technical assistance. Therefore, it can be
analysed that with the help of analysing and evaluating each clause included in the memorandum
of WTO accession and understand the guidelines regarding formulation of policies in context to
setting different interest rates, export import policies, etc. It resulted in formulation of more
effective strategies through which they can improve their workings.
As per the views of Pogoretskyy and Melnyk (2016) accessions to WTO resulted in
partnering of the country with Asian development banks. It helped them in taking all the
necessary steps for developing coordination and co-hosting among the domestic banks with the
Asian development banks. It helped banks in making rising the efficiencies of mercantile banks
in formulation of policies and setting the rates with a view to spread sufficient amount of
financial resources within the world. Further, Siddiqui (2019) also said that WTO realised that
lower amount of investment is leading situation featured by Tajikistan's banking sector. Thus,
WTO made the banks to develop their strategies and plans for the private, small and medium
43

sized enterprise so that they can gain substantial amount of expansion.
Furthermore, as per the views of Smart (2017) with the help of accession to WTO by
Tajikistan, the monetary authorities of country started developing their monetary policies, set
plans regarding implementation of taxation system, judicial regulations regarding international
transactions, etc. Further, with the help of guidelines mentioned in the memorandum of contract,
Government of Tajikistan also became able to liberalize their monetary policies. Further, in this
context, Grant and Boys (2015) has a view that with the accession of WTO, the overall
businesses could become able to grow at the potential rate. On the other hand, as the
development of different businesses have direct impact over the growth of financial and trading
market of the country, it leads to drive up the trade and economic development and investment in
all over the country. In this order, it can be said that the accession leads to improve the trade
investment within the monetary and financial market of the country that positively influenced the
banking sector of Tajikistan.
Bruszt and Palestini (2016) also talked about the benefits gained by the banking sectors in
lieu of accessions to WTO within the monetary system of the country. As per their views,
partnering of Asian development bank with Tajikistan, resulted in improving the quality of its
domestic banks in developing effective plans and procedures for controlling the flow of money
within the country. Further, this partnership also make the banks to liberalise their policies for
different types of businesses and individuals. This step helped the banks in increasing the amount
of commercial and personal loans taken by different persons of the country. Thus, it can be
evaluated that accession to WTO in Tajikistan leads in providing great benefits to overall
banking sectors of the country. In this context, Shadikhodjaev (2018) said that the
implementation of rules developed by the world trade organization within the operations of
banking sector helps the banks in improving the knowledge of its managers, board of directors
and other members of its management team in developing more effective plans to be
implemented over the banks at the time of providing services to their customers. It results n
increasing the attraction of population towards policies of bank. Thus, banks become able to
increase their number of customers and amount of investment by this way. Hence, accessions to
WTO results in development of effectiveness in the bank regarding attracting a large number of
customers and improve their value of business as well.
On the other hand, Naseer (2017) also have view that implementation of WTO regulation
44

within the trade regulations of international business of the country results in implementation of
some rigid rules and regulations of the foreign companies. It affected the value of trades and
amount of foreign direct investment within the country. In this order, due to involvement of trade
policies upon several businesses of country resulted in increasing difficulties for different
business organisation who either imports or exports their goods and services across the
geographical boundaries. Thus, it negatively influenced the economic growth of Tajikistan.
In this context, Wignaraja and et.al., (2018) also said that through different policies of
monetary authorities of the Tajikistan formulated on the basis of rules and regulation of WTO,
resulted in reduction of tax rate over the cotton industry. As the Tajikistan is one of the largest
manufacturer country of cotton, the banking sector have a huge impact of cotton industry. With
reduction in tax rate, the prices of cotton also went down that helped the cotton traders in
increasing their revenues from export of cotton. In this regard, Shaofeng (2017) shows that this
accession to WTO in Tajikistan helped the cotton industry in improving their exports. Therefore,
it can be said that, with the WTO helped the cotton industry in bringing more value of foreign
currency within the country. In this regard, with the implementation of WTO Tajikistan leads to
gain an economic growth at a large level.
Del Negro and et.al., (2017) said that WTO accession contract sanctity and adequate
intellectual property right protections remain elusive. Further government of Tajikistan also
obligatory arbitrary trading policy in order to prevent the partners because they sell it without
notifying their partners. As per the view of Escaith and Chemutai (2017) banking and financial
authorities formulated effective strategies and plans, the Tajikistan effectively faced recession
and helped its banking sectors in improving its stabilization. The effective plans formulated on
the basis of policies and guidelines of WTO resulted in increasing the nominal lending rates
about 27 % for providing loans in national currency and 18 % for providing loans in other
currencies such as dollar. On this Liu, Wang and Xu, (2017) said that the commercial banks were
restricted by WTO to restrict the amount of to be borrowed. It resulted in increasing the inability
among the small and medium sized business enterprise in borrowing loans for performing their
normal business transactions or expand their business. It resulted in becoming a challenge for the
commercial banks as reduction in their business operations and amount of profit to be gained by
them in lieu of interest on loan taken by business.
Moreover, as per the view of Gust and et.al., (2017) Because of liberalisation made in
45

Interest rate, many commercial banks of different economies has to face difficulties and adverse
situation in managing ttheir banking as well as financial activities. Due to political reasons,
banking sector have to face various problems including ineffective operational management and
risk management. Further, due poor environment relating to generation of excessive profits. On
this Caballero, Farhi and Gourinchas, (2017) argued that WTO accession in Tajikistan resulted in
imposition of liberalisation within the monetary policies of the country, leads to provide
commercial banks more freedom to perform or act in respect of pricing of their loans, deposits so
as to compete with every commercial bank. Also, it has been aimed at bringing improvement in
the overall efficiency of bank for promoting economic development and growth thus making
economy more competitive and strong. After the process of liberalization of interest rate was
completed, all the commercial banks has the power to gain full authority. It helped commercial
businesses in growing with a rapid rate as liberalisation resulted in increasing the number of
borrowers. Besides, by charging appropriate rate of interest, they also become able to generate
appropriate amount of profit from it.
Arteta, and et.al., (2016) said that by implementing WTO within the Tajikistan will
definitely help to increase the economy of the country because it will provide large amount of
foreign investment and it will increases the supply as well. The effect of such exports and
international business transactions would result into high development of state. It would result in
a rapid growth of overall economy of the country through which banking sectors could grow
themselves easily. In this context. Bruno and Shin, (2015), argued that WTO makes its each
member state to formulate policies in uniform manner. It may provide negative effect over any
specific economy whose condition may not be appropriate for the policies framed as per the
regulations of World trade organisation. It may also have a direct impact over the business of
commercial banks of a country.
Abdullah, (2015) has a view that being a member of world trade organisation, Tajikistan
would have to adhere to enormous rules and regulations which would be a tedious task for the
law making authorities of the country. It leads to ineffective rules and regulations of the country.
It can be caused due to guidelines provided by world trade organisation on the basis of which
each monetary policy of the country. Besides it, Khalid, Shehzad and Naqvi, (2019) argued that
regulations and policies of WTO leads to improve the efficiency of banks and other financial and
monetary institutions in formulation of laws and plans with the help of which they can gain a
46

rapid growth. Also, it can also help in increasing the economic growth of the country as a whole.
2.5 Limitation of the review framework address by the study
As discussed above, the theoretical framework have their own limitation, such that the
interest rate parity theory is criticized because of many assumptions which are further do not
based upon the real market. As a result, it also consider the aspect when there is an gain petition
for the prevalence with a high involvement charge results which has its hold against other
medium of exchange which have low interest rates. Moreover, as theory is completely based
upon the two currencies which have their different interest rates and there will a difference that
further lead to discount and a premium exchange rates so that it may avoid arbitrage
opportunities. On the other side, Liu, Wang and Xu, (2017) stated that the classical theory of
interest has their own limitation such that the most difficult defect with the classical theory is to
disregard of the influence of alteration in outgo on saving and investment. Like, the balance
charge of interest and the level of income is actually determined simultaneously and they are also
interrelated.
Conceptual framework
47

2.6 Summary
It can be concluded that financial liberalisation is prominent feature in both formed and
underdeveloped state. This study aimed is to determine and examine quantitative and qualitative
impact upon the financial institution and countries. Financial liberalisation is characterized as a
gradual activity of liberalizing financial economy of the land, there are different legislature
activity which secure business liberalisation occurring at various time period. Thus, with help of
chief constituent investigation, identification of individual most essential factor serving as agent
for business liberalisation and business improvement can be done. In this competitive world by
using process of liberalisation and globalisation of world economy, it provides several benefits to
many business organisation in form of competitive advantages, market share etc.
48

Also, it provides supports to business firms thereby expanding their business operations
to the international market across the globe. Unless and until financial institutions brings update
in themselves as needed, it is difficult for them to last and vie in the global activity. In this
context, the study provides an overview of how the banking industry is outsourcing its activities
to different sectors in both domestic and international scenarios. The study gives information
with knowledge of how financial sector can sustain in market and helps in developing suitable
methods on outsourcing of financial services by bank (Heagney, 2016). The examination
presents different model related to interest rate that show the effects of variation in interest rates
on economic growth in developing countries especially Tajikistani case. The report has reflect
the annual report related to Tajikistan's bank from 1990 to 2015 from the National Bank of
Tajikistan, National Bureau of Statistics and World Trade Organisation.
49

CHAPTER 3: RESEARCH METHODOLOGY
3.0 Introduction
It is defined as process or method for conducting of research study. It is known as systematic description
which provides foundation for successful execution of research project. The chapter will describe the
different approaches used in consideration with explanation regarding process of collecting data &
analysis for making study more effective and meaningful to others as well. Therefore, using research
methodology helps to get a solution of the problem and using the specific technique would help
researcher in collecting an information which is relevant to the topic and that is why, methodology is also
used for preparing the research report in an effective and meaningful way. Moreover, this chapter
includes philosophy, approach, strategy, design, data collection and methods of analysing the data so that
these collected data enables in conducting the research in more precise manner & researcher also achieve
the defined aim and the objectives in better manner. Therefore, to reach the aim and objectives, researcher
specifies each and every term with proper justification.
3.1 Theoretical paradigm and assumptions
The purpose of this report is mainly to determine an impact of fluctuation in
interest rate within commercial banks in Tajikistan and the purpose of present reserach report is
to choose the philosophy. For that, there are three philosophies that involves Methodology,
Epistemology and Ontology that are seen as interlinked and this are as mention:
3.1.1 Epistemology
As per the view of Cyr (2016) this study is of beliefs and the views related to suitably
determine or inquiry about nature of the globe. Thus, it is the theory of the method or ground of
knowledge which is actually set into assumptions and claims. Moreover, this also helps to
describe the validity & scope of a knowledge which are counted and techniques that employed
for purpose of conducting a study. Hence, epistemology also provides an idea relating to what
separate opinion from that of belief. Overall, it also assist to make sure that a true conclusion
reflects validity and is not counted as an opinion.
3.1.2 Ontology
According to Quinlan and et.al., (2019) Ontology is related towards what the
reality is & the way in which it is communicated with that of philosophical position. Moreover, it
also describe interpretation of people on reality nature and even the author also state that
ontology study referred as study of an existence which is developed based on assumption and the
50

absolute meaning of the collected information.
3.1.3 Methodology
In the view of Heagney (2016) methodology is define the procedure which is used to
acquire knowledge and the current study, it is analysed that with the help of this method,
researcher uses the methods in order to generate the results and outcomes. Author also stated that
it is a study of an instance in an action in which the different theories are used that help to meet
the define aim and conduct a study in more precise manner.
3.2 Selection of research methods
For completing research study, different method as well as procedure needs to be followed. Based
on empirical literature & Theoretical in respect of finance segment and other hypothesis is been surveyed
by keeping in view to provide better knowledge of an empirical results that needs to be gathered. The next
step involves compiling all data gathered as per requirement of research report. The annual data has been
taken from 1999 to 2014 that are utilised for enabling empirical analysis for long run. Also, it is the time
period that encompasses pre-reform era which depicts financial repression, and involves post reform era
which reflects as financial liberalisation indication. Prior to an application of formal type of econometric
methodology, it seems as essential to assess the behaviour of data by use of correlation and different
descriptive statistical tests (Fletcher, 2017). Such statistical tests comprises of mean, standard deviation,
variance etc. which helps in making detailed analysis of data.
The empirical undertaking in validating this assertion would include co-integration analysis by
using the co-integration approach. This approach of Co-integration allows researcher in making proper
analysis into an existence of a stable long term relationship between different pertinent variables that is
financial development proxies, liberalisation proxies, rate of interest, savings, investment and growth.
Therefore, for generating financial liberalisation index, study adopts and makes use of combination of
variables relevant to internal financial liberalisation process of economy.
3.3 Research Philosophy
Research philosophy refers to a notion through which scholar collects, assess and analyse
relevant data required for completion of the study. It is mainly categorised into two parts that is
Interpretivism & Positivism. Using the mixed approach in which both qualitative and quantitative
research helps in finding out practical solutions for overcoming the limitations of the mono-method
research that is discussed for last 50 years. Using this research philosophy, researcher may easily analyse
the assumption of the selected respondents in order to achieve a defined aims & objectives in an
appropriate manner. Further, through research philosophy, researcher may address all the issues which are
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involve in a dissertation and this also involve to being aware and formulating the beliefs as well as
assumptions.
This research study is based on comparative analysis, positivism philosophy that adheres to
particular research part subject having focus on surveys, statistical data collected and questionnaire. Also,
emphasis is made only on factual knowledge as gained through observation including measurement
(Holston, Laubach and Williams, 2017). In comparative analysis study role of an investigator limits to
collection of data and an interpretation through the objective approach & research findings are seen as
quantifiable and observable. Therefore, it clearly reflect that using assumption and beliefs, researcher may
easily attain the defined aim and objectives in better manner and also conduct the research in better
manner. Moreover, by using correct philosophy and using SPSS as a statistical tool will help the
researcher to generate the best results.
Another type is Realism which is an idea of independence reality from a human mind and such
philosophy is based on an assumption, however, Interpretivism philosophy which also includes a
researcher for interpreting an element of the study and it also assume the access of a reality as well
(Kumar, 2019). Moreover, this research philosophy also enables scholar to interpret the results on the
basis of questions so that researcher may easily reflect on the different aspects of the issue.
Researchers on choosing positivist approach in study defines independent thoughts related to the
subject matter which can be purely objective. Positivist approach of philosophy covers scientific part
having its main focus on collection of data via surveys, questionnaire and statistical means. Independent
means as maintained minimal interaction with research participants at the time of carrying on research
process. Interest rate tool enables financial market of the economy thereby helping in providing proper
and effective allocation of available resources. Further measures to be undertaken in respect of cash and
capital flow & its controlling, monitoring, & managing for having optimum capital allocation supporting
smooth functioning of financial sector.
Justification for the research paradigm and methodology
Research paradigm refers to an approach that relates to framing of research project having need
to cross examined and verified from research commodity side. Positivism also refers as logical positivism
defines scientific method for establishing truth and reality of objective (Bresler and Stake, 2017).
Positivism is based upon view that science is only foundation for true knowledge as well as understanding
which contains methods, techniques and procedures as used in natural sciences. It offers best framework
for investigating the social world related to the topic. It reflects strict empirical approach providing
knowledge which is based directly on experience, facts and causes of behaviour. Positivism approach is
concerned with scientific method to study of human action, its meaning etc.
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Shift from positivism to post-positivism has been observed in mid 20th century. Post-positivism as
per the dogmatic view of positivism states that turning emphasis from absolute certainty to probability
can constructs knowledge, better understanding rather than process of laws of nature noting (Ledford and
Gast, 2018). As per Post-positivism approach, strict adherence to scientific method research is not enough
as research outcomes are neither objective nor unquestionably certain. Post-positivism process is
influenced by philosophy known as critical realism as distinguished from positivism as per focus made on
theory verification or falsification (Fletcher, 2017). As per critical realism observations may involve error
and mistakes resulting in modification in the theories.
Objectivity can nevertheless be achieved by using multiple measures, observations so as to gain
clear understanding of what is happening. To maintain proper balance in between existing competitive
environment, safety and soundness of the whole banking system, it is required on part of government to
adopt effective and cautious approaches in line with liberalisation of interest rate (Kumar, 2019). In
discussion below, two are treated as belonging to the same family. In mixed research process, researcher
makes use of combination of quantitative and qualitative research methods, approaches in completing
single research study. The qualitative and quantitative parts of a research study can be conducted
concurrently i.e. conducting both parts at same time or in proper sequence so as to address a research
question effectively & provides positive value to researcher.
Macroeconomic analysis before Keynes was limited to monetary theory under which neoclassical
quantitative theory of money dominated. The initial prerequisite for neoclassical macroeconomic analysis
was full employment of labour and other factors of production, the percentage was treated as a
phenomenon of real economy, balancing supply and demand of capital effect of changes in money
amount done to influence price level (Meredith, Mantel Jr and Shafer, 2017). Keynes considered savings
and investments as a processes which is determined by different factors, whereas investment and savings
doesn't depends on ratio of interest rate and marginal efficiency of capital. Liberalization of interest rate
can't produce expected benefits from accounting & business transactions with situation including timing,
pace and sequencing are off or not in line with the set defined procedures.
As per modern portfolio theory, problem of portfolio optimisation aimed to minimise risk at a
given average profitability level related to business as well as financial sector. Also the market portfolio is
a set of all available forces present at the moment the investor securities is effective. By having
combination of market portfolio along with risk-free asset provides efficient portfolio with less risk and
less expected income (Litosseliti, 2018). This approach is related to macroeconomic, since its main object
is distribution of aggregate capital in the economy into 2 forms viz. cash and non-cash i.e. in the form of
securities.
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The economic, monetary and fiscal policy impact on economy which is largely transferred with
help of mechanism of money and securities markets. By creating solid and empirically applicable
framework for research on the functioning of the money and securities markets it has been able to make
improvement in overall efficiency of bank for development and growth of the economic sector thus
making it more competitive and strong (Nwafor, 2018). Furthermore, emphasis is made on changes taking
place in these markets affect consumption, investment, production, employment and the economic
growth. During different stages of such liberalization, all commercial banks were given more and full
power to set down all the interest rates of their deposits and loans as well. Therefore, to determine the
exact situation, it is quite necessary to use Positivism theory in which statistical data are used by using
SPSS tool and it provides a direct relationship between all the factors and hence research may also attain
the defined aim and objectives as well.
3.4 Research approach
It is related with concept and procedure which consist of assumptions necessary for undertaking
research process such gathering of data, analysis and interpretation for providing detailed conclusion of
subject matter. Deductive approach helps researcher in framing new hypothesis, themes and concepts
which are essential part in carrying on successful research project. On the other hand, an inductive
approach is concerned with generation of new theory which has been emerged from the process of data
collection. The research study having its basis on comparative analysis and on existing financial
liberalisation approaches as applied by numerous countries (Meredith, Mantel Jr and Shafer, 2017). Thus
for this research project, most appropriate approach for completion of whole study is deductive one.
Deductive research approach is related to well-known theory or phenomenon, tests whether such
theory is valid or beneficial for given circumstances. The deductive approach follows the path of logic
and reasons which are most likely or closely related to research subject matter. The reasoning under
deductive approach starts with formulation of theory and thus leads to development of new hypothesis
(Quinlan and et.al., 2019). Deductive reasoning basically deals with factor related to reasoning
from general to particular area of research subject matter. Inductive reasoning approach is opposite of this
part. In other words, deductive approach involves formulation of hypothesis along with their subjection to
testing during research process, while inductive studies do not deal with hypothesis formulation in any
manner.
Pros: this method helps the researcher to correct the conclusion without making any errors in the
judgement and it also generate the results without bias so that it will help the researcher to reach to the
aim and objectives.
Cons: This approach is consider quite formal as it encourages the beliefs and it is also a one way
communication in which the researcher did not collect the information which is based upon the research.
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3.5 Pilot Study
The term Pilot study provides norms, standards & guidelines for complete scientific research
work in any of the social or management research project study. Therefore, through effective guidelines,
researcher may also making improvement in own research and also meet the quality standards as well.
Basically pilot study is used to improve the quality and efficiency so that they gather an information prior
to larger study. This is a small experiment in which researcher is gather information to determine the
feasibility of an approaches which is used by researcher for generating results. Moreover, the study also
specify that the data should be collected for the research project should be accurate and proper so that it
will help to meet the deadlines as well. The pilot study has been conducted by selecting 50 respondents
from different banks so as to update questions and eliminate errors, mistakes which has become part of
questionnaire. For primary research, questionnaire is design in which the researcher, may also redesigned
when senior ask for some corrections in order to remove errors.
3.6 Research design, Strategy and Procedures
According to Alavi and et.al., (2018), research design refers to conceptual framework related to
techniques and methods which has been adopted by the researcher for combining different research
components in the project. It is arrangement of condition as undertaken for collection and analysis of
data in manner which aims to combine relevance to research purpose with economy in procedure.
According to Bresler and Stake (2017), the term research design constitutes blue print of
collection, measure and analysis of data and includes different methods of research such as survey,
observation, experiment, content analysis or their combinations. Through research design, the researcher
may easily understand and interpret results in more efficient way because it provides an insights about
how the research is conducted using specific methodology, even the direction of how the research is to
be conducted is further formed with the use of research design. Another reason of choosing the research
design is such that it accurate the purpose statement of research design & also measure analysis, further
the outcome of research design are also applicable in order to attain the key objectives.
There is competition between public and private sector banks regarding better performance as
well as productivity. Therefore, it is a keen need to study such matter having basis of secondary data
obtained from selected banks' annual reports. The population of study consists of all type of Tajikistan
banking industries and sector which successfully implemented financial liberalisation and its related
process. Design of study indicates two things such as the size of sample and methodology used in
selecting sample banks.
Banks and financial institution lends their capital to large business organisation with objective of
gaining maximum interest amount. Their main objective behind such lending is that these business firms
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have good credit score as well as trust worthy among market place which provides ease for banks in
getting their loan repayment easily.
3.7 Data Collection
This study can be completed with help data to be collected from both secondary and primary
sources as obtained from the annual report of selected public sector and private sector banks. Appropriate
and relevant data has also been collected with the help of interviews and questionnaires as prepared.
Different Bank quest, books, periodicals, journals and different website related banking industries etc.
have used for better reliability. Opinions expressed in Business standard, accounting literature, Annual
review used in completion of study.
Process of data collection:
To identify perception regarding providing financial services questionnaire has been designed and
divided into 8 groups from Group A to Group G. It helps in identifying quality, satisfaction and
transparency financial sector. Also it will help in determining whether there has been any negative or
adverse impact on financial sector performance of Tajikistan. The final questionnaire has been prepared
in line with aims, objectives and hypothesis.
Questionnaire Nature:
Group A: Demographic Information It contains personal information.
Group B: General Information
Group C: Service Quality
Group D: Level of satisfaction regarding transactions
Group E: Transparency
Group F: Pensioner Information
Group G: General Opinion
3.7.1 Primary Data Collection
The process of primary data collection refers to the data that is collected first time by researcher,
so as to evaluate better outcomes out of it which includes observation, survey,interviews etc. (Cyr, 2016).
Researcher also uses the method of primary data collections in which researcher drafted the questionnaire
which will be asked to the selected respondents and on the basis of that, outcomes are generated. As
primary data collection methods is the original documents which is actually creates for particular event
Pros: the biggest advantage of using this method is such that it has not been misinterpreted by the
outside parties because direct information is collected from the audience. Further, the material are also
generally be tracked and attributed back to the original creator which give much more weight to the
points.
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Cons: On contrary, the disadvantage of using this method is such that the primary sources may be
incomplete and unusable. Even the researcher also completely relies solely on their own knowledge as
well as interpretation.
3.7.1.1 Quantitative Questionnaire
In present research study, sample is divided into two sub-groups based on respondent’s opinion
regarding to the financial services sector on nationalised and private sector banks. For gathering data &
informations relevant for quantitative research subject matter, respondents are selected randomly from
the respective banks. Scales and measurement which has been used for such process includes: Five point
Likert scale (1 to 5). such that 1 is for excellent, 2 for good, 3 for average, 4 for poor and 5 for very
poor.
With questionnaire prepared related to different categories, researcher can easily acquire
information pertaining to the subject matter of research topic. It will assist researcher in getting better
understanding and interpretation about the subject matter which can be used by other researchers and
scholars as well in the completion of their project.
Pros: The questionnaire helps the researcher to involve multiple numbers of subjects & also
enhancing generalization of the outcomes as well. Further, it also allow for the increased accuracy and
objectivity of the results.
Cons: The findings related to the data are not generalized to the study population or
community and it is more difficult to analyse because it is not generally fit to the standard
categories as well.
3.7.1.2 Qualitative Structure
For conducting qualitative research project, data has to be collected accordingly. Information on
the basis of characteristic, features is gathered and further analysed. Also one of the source of collecting
information is personal interview with concerned officials of Banks under study. This is a semi-
structured interview which is used by the reseracher where open ended questions are asked that helps to
meet the define aim and conduct the entire research in more precise manner. Through this method,
reseracher is easily prepared and appear the competent during an interview and this provide a reliable and
comparable qualitative data. The interview only takes place voluntary and all personal data will be
confidential. In addition, qualitative structure provides stronger conclusion as they are supported by
relevant theories and concepts.
Pros: One of the advantage of using qualitative structure is that it has less complexity in
analysis of the data.
Cons: this method takes lot of time and it is also difficult for the researcher for
maintaining and assessing or demonstrating. Further volume of the data also make the analysis
& interpretation more time taking.
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3.7.2 Secondary Data
It is a method of data collection in which data has been collected already from published sources
with help of primary source. Secondary data has been collected from annual reports, magazines, booklets
etc. of various commercial banks, financial institutions and National Bank of Tajikistan. Also, sources has
been taken from internet publications, books, published articles, financial and business journals (Quinlan
and et.al., 2019). Furthermore, data has been gathered from WTO and OECD publications available on
the Financial Liberalisation reports. One of the benefit of taking use of secondary data is that it is easily
available and thus researcher can found strong as well as relevant support through work of previous
scholars. All information provided in secondary sources are of reliable, accurate nature which can be used
by researcher for completing activities of the research project. As compare to primary data it is more
reliable and validate one. For creating a brief thesis & understanding, collection of data has been made
from the secondary sources like journals, books & articles related to subject matter.
Pros: using secondary research, researcher may get much more insight and also taking an
advantage of author expertise, experience. Secondary sources also aim is to expand the material
in original sources so that it may provide more context and meaning as well.
Cons: in this researcher may have a difficulty to obtain the specific information because due to
lack of research skills, may create obstacles to collect the relevant research data.
3.8 Sampling
Sampling is the process which is used in statistical analysis in which a pre-determine
number of assumption are taken from an entire population. The methodology is also used to
sample from a larger population which is depend upon the type of analysis. There are two types
of sampling such that purposive and non- purposive. Between these all, scholar has uses simple
random sampling method in which 50 bankers of Tajikistan are selected so that they will help to
meet the define aim and also determine the impact of variation in interest rate in commercial
banks in Tajikistan after accession to the WTO.
3.9 Ethical Considerations
3.9.1 Informed consent
Also, all data collected related to subject matter is take from various websites & internet source
(Silverman, 2016). All participants has willingly participated in questionnaire by giving their written
consent. Make sure that there should be no communication error because it may have effects over the
overall outcomes in just reverse or opposite way. The respect for dignity of the research participant
should be prioritise because it may help a researcher to get accurate results.
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3.9.2 Privacy and confidentiality
Researcher should ensure that proper confidentiality should be maintained and, before the
the interview, calls or mails were used
For seeking time and t participatory consent of manager of the ownners. Further, data protection
act should be followed for ensuring that privacy of all primary data has been maintained.
Moreover, adequate level of confidentiality should be maintained.
3.10 Methodological Limitations
3.10.1 Reliability
To make sure consistency of all the selected data collection methods, the internal
consistent approach is employed in order to inspect questionnaire for the reliability. Such that it
is consider one of the best method for measuring the reliability of the questionnaires. Moreover,
because of limitation and and regards time , entire questionnaire is administrated only for one
time to respondents and exercise is followed as a pre-requisite for testing method count not be
conducted.
3.10.2 Validity
The validity of research is entirely depend upon the collected data such that researcher
uses primary & secondary research methods both in which researcher chooses text books, journal
articles in order to collect information that helps in identifying impact of the interest rates in
commercial banks of Tajikistan. The validity also relies from the primary research in which the
researcher used questionnaire in which topic related questions are asked so that it will be helping
to answer research questions as well.
3.11 Limitations and Delimitation of Study
Outsourced financial services includes application & document processing, investment
management, marketing and supervision of loans, data processing etc. Outsourcing brings in several risks
which are nature strategic, reputation, operational, counterparty, systematic etc. Failure in maintaining
confidentiality, non-compliance of legal regulatory norms can result in financial loss and reputation risk
on part of bank as well.
The manner in which data is maintained, styled and its format has also been changed which
created lack of consistency, reliability etc. Out of different means of gathering primary data discussion,
observation, personal interview, mail surveying are chosen (Lane, 2018). From perspective of accuracy of
data, utmost care has been taken to minimize mistakes, errors in collection of primary data. Primary data
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has been compared and confirmed with the official banks statistics for checking its accuracy. Difficulty
has been faced when bank officers undisclosed bank data due to confidentiality.
Banks become very much cautious in sharing their official as well as financial data with research
scholars because of increasing competition in banking sector. For collecting secondary data, researcher
has to face some difficulties in collecting annual reports of some banks. Thus, the quality of this research
totally depends on reliability and accuracy of data published in the banks' annual reports.
3.12 Summary
Research philosophy chosen is positivism approach as it is based on view that science is key
aspect for gaining true knowledge. Current research is based on comparative analysis with existing
financial liberalisation approach applied by numerous countries (Macit, 2017). Deductive approach is
considered proper one for both quantitative and qualitative type so as to identify deep assumptions thus
giving mixed combination positive value. Further, researcher also opted deductive approach for attaining
the aim i.e. “to analyse the impact of the interest rate on commercial banks of Tajikistan”. Through this
method, the researcher also generate the results without consuming extra time and also reach to the
outcomes as well.
Additionally, researcher also select both primary & secondary methods of data collection in
which questionnaire is used as primary method of method of data collection in which questions are asked
to different respondents in order to generate the best outcomes. Further, using secondary sources such that
books, articles and Journals, researcher collect information related to topic and also generate best results
too. Further, researcher opted thematic data analysis method where the graphs, charts and tables are used
through for presenting ideas in presentable manner. The chosen research strategy is quantitative research
method in which SPSS tool is used and chi- square test is applied that helps in checking the reliability of
hypothesis. Lastly, random sampling method is also used for determining views of the respondent related
to specific topic i.e. to determine the impacts of interest rates on the commercial bank of Tajikistan.
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CHAPTER 4: FINDINGS
4.1 Introduction
The present chapter contains an examination and tests of the data set that has been used to
analyse the research the issues, in particular, to ascertain and analyse the changes or influences
commercial banks have in relation to changing interest rates and governmental regulation
relevant to banking operations and to analyse the impacts of changes in lending rates which
affects commercial banks’ operations and growth. However, in relation to this, there will be
determination of the main factors which affect commercial banking operations as well as interest
rate variation in Tajikistan. There has been some development of various plans and operational
variation which will help to make proper determination of the operations. In this process, there
will be influences of various aspects and elements which have been used to examine the factors
such as descriptive statistics, ANOVA tests, T-test, Chi-square, etc. Therefore, such tests and
statistical analysis will bring accurate information relevant to the data sets. In addition, as per
analysing the appropriate outcomes, there will be preparation of several questions and interviews
with professionals at commercial banks of Tajikistan which in turn will be useful for making
appropriate participation in this aspect.
4.2 Data Analysis
4.2.1 Test/ Retest Reliability
In respect of analysing the relationship between the group of variables are considered by the
research with approach to have adequate ascertainment of the data base. Thus, in accordance
with this, five industry-related original questions were prepared, which were not taken from any
research paper or magazine. These questions were put to 150 employees of commercial banks in
Tajikistan. Thus, this test will be helpful in analysing the reliability of the information which
have been used for the further tests and analysis. In accordance with designed data set, there have
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been implication of Cronbach’s alpha coefficient over the 5 variables. Thus, there have presented
information as follows:
4.1 Case Processing Summary
N %
Cases
Valid 150 100.0
Excludeda 0 .0
Total 150 100.0
a. Listwise deletion based on all variables in the procedure.
4.2 Reliability Statistics
Cronbach's Alpha Cronbach's Alpha Based on Standardized Items N of Items
.405 .412 5
Interpretation
Cronbach’s alpha is the tool that is used to measure the reliability of the scale that is used to
measure particular variables. A commonly used scale is the Likert scale, and Cronbach’s alpha
determines whether a variable can be measured in better way. In the present study, the
Cronbach’s alpha value is 0.405, or 40%. This demonstrates that the scale that is used failed to
measure the variable.
As it is clear that the reliability of the test is not valid and that is why, in order to improve the
same, scholar start using another reliable tool that helps to answer the research question. Such as
ANOVA is used which in turn helps to identify the difference between two variable which is
used by investigator. On the other side, Chi- square test is also applied in order to analyse the
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relationship between categorical variable. Moreover, scholar also uses correlation as a tool in
order to address this limitation and generate the best and valid results as well.
Descriptive
This method helps in bringing summary information about the variables that have been analysed
to have accurate ascertainment of various activities. There will be influences of various statistical
elements, such as mean, mode, median, standard deviation and range, etc. Therefore, it
represents the summary statistics of the database that can be helpful in managing business
operations. Moreover, there will be an analysis of various outcomes based on interest rate
fluctuation and relevant changes in the operations of commercial banks in Tajikistan.
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4.3 Descriptive Statistics
N Minimum Maximum Mean Std. Deviation Variance
Does your bank facilitate the
appropriate interest rate in deposits? 150 1 5 2.29 1.277 1.631
Are the online operations performed
by your bank is quite satisfactory? 150 1 5 2.15 1.252 1.567
Do you feel safe while making
transactional operations? 150 1 5 2.33 1.251 1.566
Is your banks asset liability
management units play main role in
addressing the issues?
150 1 5 2.48 1.283 1.647
Do you believe that, vulnerability of a
credit union’s financial condition in
adverse market movements?
150 1 5 2.15 1.252 1.567
Valid N (listwise) 150
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Interpretation
The statistics revealed that most banks are facilitating appropriate interest rates on deposits, as
the value of statistics is (M = 2.29, SD = 1.277). People are also quite satisfied with the online
banking transaction facility provided by their bank in Tajikistan, as indicated by the statistics (M
= 2.15, SD = 1.252). People feel safe while making banking transactions, as indicated by the
value of the statistic (M = 2.33, SD = 1.251). Overall, it can be said that in the past couple of
years, commercial banks in Tajikistan have made significant improvements to their technology
base, due to which people do not face any particular problems with online transactions, and this
shows they are highly satisfied. Respondents believed that asset and liability management is the
one of the main factors that assist banks in paying due attention to addressing problems on time.
This is indicated by the value of the statistics (M = 2.48, SD = 1.283). Respondents also believed
that adverse market movements are greatly affecting banks financial conditions, as reflected by
the statistics (M = 2.15, SD = 1.252.
In order to analyse the results at a more granular level, a detail discussion on results the obtained
is provided below.
 Does your bank facilitate the appropriate interest rate in deposits?
Professionals were asked if their bank facilitates the appropriate interest rates on deposits. 37.3%
of professionals believe that there are appropriate interest rates on deposits of banks. Therefore,
there are appropriate rates awarded to consumers on their savings account and deposits they
make in banks. Moreover, due to charging such rates they will retain appropriate gains on such
investments. Along with this, there are various reviews from professionals on which majority are
in favor. It can be said that commercial banks in Tajikistan are charging satisfactory interest rates
on deposits. In accordance with pension scheme that has been offered by the government to its
employees on the basis of their job and level of remuneration retained by them. There have been
influences of government policy development which in turn has a negative and positive impact
on schemes and offered by banking industries. Thus, the motive of the government in bringing
appropriate revenue gains to 5citizens on the basis of their performed duties and jobs in a
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particular sector. It basically depends on the level of operations performed by a bank as well as
the number of consumers associated with banking activities. Thus, it can be said that,
governmental plans and policies are less affecting the banking sector in Tajikistan which are in
turn have facilitating proper wealth to society. It will be based on changing effective rates of
interest among consumers in saving their implied funds.
 Are the online operations performed by your bank quite satisfactory?
The next question considers the transactional activities performed by banks for accelerate
banking activities and respondents were asked about levels of satisfaction when making online
operations. The majority presented their reviews in favour and 41.35% strongly agree with this
statement, 25.3% agree, 16.75% are neutral, while the same percentage disagree with this
statement. As per analysing the variations in the outcome on which it can be said that, currently,
banking operations have been enhanced in Tajikistan resulting in higher levels of customer
satisfaction. Moreover, in relation to these findings, it can be said that online financial
transactions are comparatively secure, and the confidentiality of data is managed well in the
Tajikistan’s commercial banks . A separate risk management system is needed in the banking
industry. This helps to save time as well as perfectly executing business operations. It ensures
issues are addressed with proper consideration of all causes and impacts. Currently, this
technique is used by banks to make appropriate operational analysis and efficiency of the issues,
which in turn will be useful and linking for attaining favorable banking operations. On the other
hand, considering the above findings, it can be said that there are significantly positive reviews
obtained from professionals in commercial banks. Thus, in respect of this, maximum positive
reviews have been given by the professionals, which emphasizes that the findings demonstrate
that there are satisfactory risk management systems in the organization.
 Do you feel safe while making transactional operations?
Professionals were asked whether the securities of the transactional activities they perform in the
banking operations make them feel safe, on which it can be said that 33.3% professionals
strongly agree with the statements, 26.7% only agree, while 20% are neutral. The majority of
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opinions are in agreement with this statement on which it can be said that they are well confident
in terms of having appropriate analysis over the data base and appropriate determination of
practices. In this case it can be said that the banking firms have to be more focused in terms of
improving security at a transactional level. The details relevant with accounts, amount as well as
destination needed to be kept confidential as it will not affect the wealth of any individual. Thus,
the inter-banking operations have been analysed and determined by the researcher on which
banks lend money to each other with a fixed interest rate to be charged. It helps them in
operating activities as well as improving banking functions in the environment. In analysing the
outcomes there are approx. However, it has been analysed that the borrowing interest rates are
needed to be reformulated which will bring the positive rise to the income generation as well as
operational performance of the bank. There will be development of various policies and changes
in activities which can make suitable development in the operational practices. It creates
opportunities to banking firms in terms of retaining appropriate amount of revenue as well as
make proper changes in operations.
 Do your bank’s asset liability management units play main role in addressing the
issues?
Professionals in commercial banks of Tajikistan were asked whether their bank is capable of
facilitating adequate asset-liability management to address the financial issues. Thus, the
question arises after considering the issues in the operations which have been faced by society
after impacts of the global financial crisis. The findings show that a majority of respondents are
in favour, which states that their bank is capable of facilitating the most adequate services to
them. The main role of the asset-liability department is mainly associated with facilitating the
institution’s strength in terms of meeting debt challenges in the environment. There can be a rise
in operational gains and business motives which will help in meeting the targets at the right time.
Moreover, the commercial banks in Tajikistan have the most convenient and appropriate asset
liability management. In relation to making additional gains, banks usually offer term deposits.
This is based on different rates for several terms of borrowed amount. There will be revenue
generation and adequate increment in the profitability of the banking sector in Tajikistan. The
long-term loans will have less rates, while short period loans have higher interest rates. From a
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psychological perspective, it can be said that there is higher number of short-term loan borrowers
stated in the market. They usually take out loans for specific purposes, such as purchasing a
home, vehicle or education. These loans are basically for a short period of time, and this helps
banks to retain higher gains. In relation to the above listed analysis, various favourable outcomes
have been addressed by the researchers. Professionals in commercial banks responded that the
majority of them are charging rates with respect to variations. Thus, again there are positive
reviews from banks that they are adopting such techniques, which will benefit them in getting
higher revenue through banking operations.
 Do you believe that vulnerability of a credit union’s financial condition is same in
adverse market movements?
In analysing influences of credit union are in context with helping each other in the financial
operations. They facilitate loans or borrowing services to each other, which in turn provides
appropriate operational gains at lower interest rates. In analysing such outcomes, it can be said
that, such factors will affect economy and which results changes in interest rates. On the other
hand, the above listed analysis show that 41.3% of respondents strongly believe that a credit
union’s financial condition fluctuates in relation to the changes incurred in market conditions.
Therefore, it can be said that to retain higher profits and securing capital funds in business.
Moreover, such variations had been done in accordance with making changes in the operational
activities and business activities which has have led to the organisation retaining higher returns.
Thus, these factors influence interest rates risk of such industries by way of reducing the level of
sales and operational activities performed by them. There are various obstacles and issues which
affect operations of the firm that helps in managing certain activities for adequate operational
analysis. Therefore, these are the banking operations which need to be considered seriously and
administratively which will bring certain changes in the operations of the firm and that will help
them in making adequate operational changes.
68

Therefore, in this respect various strategic operations and decisions have been made by the
banking professionals which allows them to meet the obstacles. Addressing such issues will be
beneficial in retaining higher amount of profits through operations as well as gathering large
number of consumers. In a formal process, there will be analysis based on making proper
auditing of all accounts and analysis over causes which have affected the operational practices of
banking firm.
4.2.2 Univariate Statistics
This is the concept which will help to analyse the types of data and observations to single
attribute or characteristic. However, by analysing the univariate data, the researcher denoted the
independent variable as ‘interest rates’ and dependent variable as ‘revenue in banking
industries.’ In addition, there will be use of various data sets which will be analysed, collected
and measured for accurate data analysis.
Hypothesis
 Null hypothesis: there is no mean significant difference between interest rates and
revenue of commercial banks in Tajikistan
 Alternative hypothesis: there is a mean significant difference between interest rates and
revenue of commercial banks in Tajikistan
Univariate Analysis of Variance
4.4 Descriptive Statistics
Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
Mean Std.
Deviation
N
69

2.29 1.277 150
The mean value is 2.29, which means that sample respondents agree with the fact that the bank is
facilitating appropriate interest rate on deposits.
4.5 Tests of Between-Subjects Effects
Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
Source Type III Sum
of Squares
df Mean Square F Sig.
Corrected
Model .000a 0 . . .
Intercept 788.907 1 788.907 483.547 .000
Error 243.093 149 1.631
Total 1032.000 150
Corrected Total 243.093 149
a. R Squared = .000 (Adjusted R Squared = .000)
70

Diagram 1
Interpretation
The above diagram reflect that there one variable impact upon another variable and that is why,
there is a significant difference between these variables which is further analysed through a
results generated from the results generated by using tool.
The diagram 1 illustrates a univariate analysis of the data set relating to the question regarding
whether interest rates presented by their banks are appropriate or not. The responses show that
the majority of respondents are in favour with the services and interest rates charged by their
banks on the services. Similarly, the analysis shows that the significance value is 0.000, which is
lower than P value of 0.05. This demonstrates that there is a mean significant difference between
interest rates and revenue of commercial banks in Tajikistan.
71

4.6 Descriptive Statistics
Dependent Variable: Are the online operations
performed by your bank quite satisfactory?
Mean Std. Deviation N
2.15 1.252 150
4.7 Tests of Between-Subjects Effects
Dependent Variable: Are the online operations performed by your bank quite satisfactory?
Source Type III Sum of Squares df Mean Square F Sig.
Corrected Model .000a 0 . . .
Intercept 695.527 1 695.527 443.8
77 .000
Error 233.473 149 1.567
Total 929.000 150
Corrected Total 233.473 149
a. R Squared = .000 (Adjusted R Squared = .000)
72

Diagram 2
Interpretation
The diagram from the above reflected that one variable is directly depend upon the another
variable and that is why, this result clearly shows that there is a difference between interest rate
and revenue of commercial. Hence, there is a no direct relationship between one variable such as
when interest increases, the revenue of banks is also decreases.
This question is in respect of online operations of the banking firm on which professionals have
presented their views. The online operations performed by commercial banks in Tajikistan are
judged on company services. However, the significance value of the data set is 0.000, which is
lower than the significance value of 0.05. Thus, it provides strong evidence against the null
hypothesis and acceptance of the alternative hypothesis, such that there is a mean significant
difference between interest rates and revenue of commercial banks in Tajikistan.
73

4.8 Descriptive Statistics
Dependent Variable: Do you feel safe
while making transactional operations?
Mean Std. Deviation N
2.33 1.251 150
4.9 Tests of Between-Subjects Effects
Dependent Variable: Do you feel safe while making transactional operations?
Source Type III Sum of
Squares
df Mean Square F Sig.
Corrected Model .000a 0 . . .
Intercept 816.667 1 816.667 521.500 .000
Error 233.333 149 1.566
Total 1050.000 150
Corrected Total 233.333 149
a. R Squared = .000 (Adjusted R Squared = .000)
74

Diagram 3
Interpretation
The above diagram of the study clearly reflected that significant relationship between two
variables and thus, with the help of result generated, it is identify that null hypothesis is rejected
and that is why, there is an inversely proportional relationship between these variables.
In this diagram 3, professionals were asked about the security offered by their bank when
undertaking transactional activities. The significance value has been determined as 0.000, which
is also lower than the P value of 0.05. Thus, it suggests acceptance of the alternative hypothesis
and rejection of the null hypothesis, as there is a mean significant difference between interest
rates and revenue of commercial banks in Tajikistan.
75

4.10 Descriptive Statistics
Dependent Variable: Do your bank’s
asset liability management units play
main role in addressing the issues?
Mean Std. Deviation N
2.48 1.283 150
4.11 Tests of Between-Subjects Effects
Dependent Variable: Do your bank’s asset liability management units play main
role in addressing the issues?
Source Type III Sum
of Squares
df Mean Square F Sig.
Corrected Model .000a 0 . . .
Intercept 922.560 1 922.560 560.061 .000
Error 245.440 149 1.647
Total 1168.000 150
Corrected Total 245.440 149
a. R Squared = .000 (Adjusted R Squared = .000)
76

Diagram 4
Interpretation
The diagram 4 of the study is clearly reflected the interdependency of both the variables and that
is why, it is analysed that there is no relationship between the variables and so, alternative
hypothesis is accepted. Such as there is no role of assets and liability management system for
banks.
The diagram 4 illustrated above and the table that presents the findings demonstrate that the
asset liability management system of the organisation has been helpful in analysing the issues
and making adequate changes in the operational practices. The significance value of the data set
is 0.000, lower than 0.05. Thus, it suggests acceptance of the alternative hypothesis that there is a
mean significant difference between interest rates and revenue of commercial banks in
Tajikistan. Moreover, the changes in assets and liability management system for banks will
affect the revenue and revenue generation of commercial banks in Tajikistan.
77

4.12 Descriptive Statistics
Dependent Variable: Do you accept the
weakness in adverse market movements of the
financial condition of a credit union?
Mean Std. Deviation N
2.15 1.252 150
4.13 Tests of Between-Subjects Effects
Dependent Variable: Do you accept the weakness in adverse market movements of
the financial condition of a credit union?
Source Type III Sum
of Squares
df Mean Square F Sig.
Corrected Model .000a 0 . . .
Intercept 695.527 1 695.527 443.877 .000
Error 233.473 149 1.567
Total 929.000 150
Corrected Total 233.473 149
a. R Squared = .000 (Adjusted R Squared = .000)
78

Diagram 5
Interpretation
Above presented diagram reflected how one variable is dependent upon another, also it shows a
direct relationship between both variables. Like with changes in the interest rates, commercial
banks also change their interest rate
In this question respondents were asked whether they believed the credit union’s financial
condition will have an impact as per adverse market movements. The significance value suggests
acceptance of the alternative hypothesis, which states that there is a mean significant difference
between interest rates and revenue of commercial banks in Tajikistan. This means that the central
bank or reserve bank changes interest rate time to time.. Such changes determine how many
loans people will take in the upcoming time period. Thus, revenue is affected by the intertest rate
79

and because of this, a significant difference is found. Similarly, the changes incurred in credit
unions’ financial condition may affect the banks in adverse market situations.
On the basis of the above univariate analysis of the data set, professionals of various commercial
banks in Tajikistan were asked to make appropriate determination of operational practices. The
relationship between interest rate variations and the revenue of the organisation has been
examined to have appropriate outcomes. Thus, with respect to the measurement criteria, it can be
said that there is a relationship between these variables. The rise in interest rates will affect term
deposit revenue of banks. Additionally, suggests acceptance of the alternative hypothesis, which
states that there is a mean significant difference between interest rates and revenue of
commercial banks in Tajikistan.
80

4.2.3 Bivariate Statistics
This is the statistical analysis carried out by testing the variables stated in rows and columns.
Thus, this test will help to define the appropriate relationship between the variables. A chi-square
test has also been carried out to measure the outcomes.
Yes, the chi-square test is valid because it helps to determine the relationship between two
categories i.e. online transaction and impact of interest rate upon banks.
Does your bank facilitate the appropriate interest rate in deposits? * Are the online
operations performed by your bank is quite satisfactory?
4.14 Crosstab
Count
Are the online operations performed by your bank is
quite satisfactory?
Total
1 2 3 4 5
Does your bank
facilitate the
appropriate interest
rate in deposits?
1 23 13 8 8 4 56
2 12 9 8 2 3 34
3 11 10 4 4 1 30
4 9 5 3 1 2 20
5 7 1 2 0 0 10
Total 62 38 25 15 10 150
4.15 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 10.962a 16 .812
Likelihood Ratio 12.535 16 .706
Linear-by-Linear Association 1.878 1 .171
81

N of Valid Cases 150
a. 13 cells (52.0%) have expected count less than 5. The minimum expected count is .67.
Interpretation
On the basis of above analysed data base which have presented the outcomes for chi square test
states relationship between interest rates and online operations of the banks. The value of the
level of significance is p = 0.812>0.05 in the Pearson chi-square test. On other hand, in terms of
the likelihood ratio, the value of the level of significance is p= 0.706>0.05. In the linear-by-linear
association test, the value of the level of significance is p = 0.171>0.05. On the basis of all these
three statistics, it can be said that there is no significant relationship between the variables.
Consequently, the alternative hypothesis is rejected, and the null hypothesis is not rejected. This
states that there is no significant mean relationship between these variables.
82

 Does your bank facilitate the appropriate interest rate in deposits? * Do you feel
safe while making transactional operations?
4.16 Crosstab
Count
Do you feel safe while making transactional
operations?
Total
1 2 3 4 5
Does your bank
facilitate the appropriate
interest rate in deposits?
1 19 17 11 8 1 56
2 7 8 10 3 6 34
3 14 8 4 4 0 30
4 6 4 4 4 2 20
5 4 3 1 1 1 10
Total 50 40 30 20 10 150
4.17 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 18.882a 16 .275
Likelihood Ratio 19.814 16 .229
Linear-by-Linear Association .014 1 .905
N of Valid Cases 150
a. 13 cells (52.0%) have expected count less than 5. The minimum expected count is .67.
Interpretation
The value of the level of significance is p = 0.275>0.05 for the Pearson chi-square test. For the
likelihood ratio, the value of the level of significance is p= 0.229>0.05, and in the linear-by-
linear association test, the value of the level of significance is p = 0.905>0.05. On basis of all
these three statistics, it can be said that there is no significant relationship between variables
Thus, it confirms the null hypothesis is not rejected, and the alternative hypothesis is rejected.
83

 Does your bank facilitate the appropriate interest rate in deposits? * Do you believe
that, vulnerability of a credit union’s financial condition in adverse market movements?
4.18 Crosstab
Count
Do you believe that, vulnerability of a credit union’s
financial condition in adverse market movements?
Total
1 2 3 4 5
Does your bank
facilitate the
appropriate
interest rate in
deposits?
1 23 13 8 8 4 56
2 12 9 8 2 3 34
3 11 10 4 4 1 30
4 9 5 3 1 2 20
5 7 1 2 0 0 10
Total 62 38 25 15 10 150
4.19 Crosstab
Count
Are the online operations performed by your
bank is quite satisfactory?
Total
1 2 3 4 5
Is your banks
asset liability
management units
play main role in
addressing the
issues?
1 28 6 8 0 4 46
2 8 12 5 5 4 34
3 6 10 7 7 2 32
4 13 8 4 3 0 28
5 7 2 1 0 0 10
Total 62 38 25 15 10 150
84

4.20 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 33.719a 16 .006
Likelihood Ratio 41.365 16 .000
Linear-by-Linear Association .095 1 .758
N of Valid Cases 150
a. 14 cells (56.0%) have expected count less than 5. The minimum expected count is .67.
Interpretation
In this case, there are two variables that are analysed, namely the satisfaction level of individuals
on operations performed, and the role of asset and liability management in addressing issues. For
the Pearson chi-square test, the value of level of significance is p = 0.006>0.05. On other hand,
in the case of the likelihood ratio, the value of the level of significance is p= 0.00>0.05, and for
the linear-by-linear association test, the value of the level of significance is p = 0.758>0.05. On
basis of all these three statistics, namely it can be said that there is no significant relationship
between variables and the null hypothesis is not rejected.
85

 Is your banks asset liability management units play main role in addressing the
issues? * Do you feel safe while making transactional operations?
4.21 Crosstab
Count
Do you feel safe while making transactional
operations?
Total
1 2 3 4 5
Is your banks asset
liability management
units play main role in
addressing the issues?
1 18 13 6 4 5 46
2 7 10 8 8 1 34
3 12 7 8 4 1 32
4 8 9 8 3 0 28
5 5 1 0 1 3 10
Total 50 40 30 20 10 150
4.22 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 26.036a 16 .054
Likelihood Ratio 26.312 16 .050
Linear-by-Linear Association .010 1 .919
N of Valid Cases 150
a. 12 cells (48.0%) have expected count less than 5. The minimum expected count is .67.
 Interpretation
From table above, it can be observed that there are two variables, namely the safety people
feel in online transactions, and the role of asset and liability management in addressing issues.
The value of the level of significance Pearson chi-square is p = 0.054>0.05 . On the other hand,
in the case of likelihood ratio, the value of the level of significance is p= 0.050>0.05. For the
linear-by-linear association, the value of the level of significance is p = 0.919>0.05. On the basis
86

of all these three statistics, it can be said that there is no significant relationship between
variables the null hypothesis is not rejected.
87

 Do your bank’s asset liability management units play main role in addressing the
issues? * Do you believe that vulnerability of a credit union’s financial condition in adverse
market movements?
4.23 Crosstab
Count
Do you believe that, vulnerability of a credit union’s financial
condition in adverse market movements?
Total
1 2 3 4 5
Is your banks asset
liability management
units play main role
in addressing the
issues?
1 28 6 8 0 4 46
2 8 12 5 5 4 34
3 6 10 7 7 2 32
4 13 8 4 3 0 28
5 7 2 1 0 0 10
Total 62 38 25 15 10 150
4.24 Chi-Square Tests
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square 33.719a 16 .006
Likelihood Ratio 41.365 16 .000
Linear-by-Linear Association .095 1 .758
N of Valid Cases 150
a. 14 cells (56.0%) have expected count less than 5. The minimum expected count is .67.
 Interpretation
88

The two variables analysed above are the impact of adverse market condition on the credit
union financial conditions, and the role of asset and liability management in addressing issues.
For the Pearson chi-square test the value of the level of significance is p = 0.006>0.05. In the
likelihood ratio test, the value of the level of significance is p= 0.00>0.05. For the linear-by-
linear association the value of the level of significance is p = 0.758>0.05. On the basis of all
these three statistics it can be said that there is no significant relationship between the variables.
the null hypothesis is not rejected.
89

4.25 Multivariate Statistics Descriptives
N Mean Std.
Deviation
Std. Error 95% Confidence Interval for
Mean
Minimum Maximum
Lower Bound Upper Bound
Are the online
operations performed
by your bank is quite
satisfactory?
1 56 2.23 1.321 .177 1.88 2.59 1 5
2 34 2.26 1.263 .217 1.82 2.71 1 5
3 30 2.13 1.167 .213 1.70 2.57 1 5
4 20 2.10 1.334 .298 1.48 2.72 1 5
5 10 1.50 .850 .269 .89 2.11 1 3
Total 150 2.15 1.252 .102 1.95 2.36 1 5
Do you feel safe
while making
transactional
operations?
1 56 2.20 1.119 .150 1.90 2.50 1 5
2 34 2.79 1.366 .234 2.32 3.27 1 5
3 30 1.93 1.081 .197 1.53 2.34 1 4
4 20 2.60 1.392 .311 1.95 3.25 1 5
5 10 2.20 1.398 .442 1.20 3.20 1 5
Total 150 2.33 1.251 .102 2.13 2.54 1 5
Is your banks asset
liability management
units play main role
in addressing the
issues?
1 56 2.73 1.213 .162 2.41 3.06 1 5
2 34 2.35 1.300 .223 1.90 2.81 1 5
3 30 2.43 1.194 .218 1.99 2.88 1 5
4 20 2.10 1.334 .298 1.48 2.72 1 5
5 10 2.40 1.713 .542 1.17 3.63 1 5
90

Total 150 2.48 1.283 .105 2.27 2.69 1 5
Do you believe that,
vulnerability of a
credit union’s
financial condition in
adverse market
movements?
1 56 2.23 1.321 .177 1.88 2.59 1 5
2 34 2.26 1.263 .217 1.82 2.71 1 5
3 30 2.13 1.167 .213 1.70 2.57 1 5
4 20 2.10 1.334 .298 1.48 2.72 1 5
5 10 1.50 .850 .269 .89 2.11 1 3
Total 150 2.15 1.252 .102 1.95 2.36 1 5
91

4.26 ANOVA
Sum of Squares df Mean Square F Sig.
Are the online operations
performed by your bank is
quite satisfactory?
Between Groups 5.107 4 1.277 .811 .520
Within Groups 228.366 145 1.575
Total 233.473 149
Do you feel safe while
making transactional
operations?
Between Groups 14.669 4 3.667 2.432 .050
Within Groups 218.665 145 1.508
Total 233.333 149
Is your banks asset liability
management units play main
role in addressing the
issues?
Between Groups 7.126 4 1.782 1.084 .367
Within Groups 238.314 145 1.644
Total 245.440 149
Do you believe that,
vulnerability of a credit
union’s financial condition
in adverse market
movements?
Between Groups 5.107 4 1.277 .811 .520
Within Groups 228.366 145 1.575
Total 233.473 149
92

Correlations
Hypothesis
 Null hypothesis: There is no mean significant difference between interest rates
and revenue of commercial banks in Tajikistan.
 Alternative hypothesis: There is a mean significant difference between interest
rates and revenue of commercial banks in Tajikistan.
4.27 Descriptive Statistics
Mean Std. Deviation N
Does your bank facilitate the
appropriate interest rate in deposits? 2.29 1.277 150
Are the online operations performed
by your bank is quite satisfactory? 2.15 1.252 150
Do you feel safe while making
transactional operations? 2.33 1.251 150
Is your banks asset liability
management units play main role in
addressing the issues?
2.48 1.283 150
Do you believe that, vulnerability of a
credit union’s financial condition in
adverse market movements?
2.15 1.252 150
93

4.28 Correlations
Does your bank
facilitate the
appropriate interest
rate in deposits?
Are the online
operations
performed by your
bank is quite
satisfactory?
Do you feel safe
while making
transactional
operations?
Is your banks asset
liability management
units play main role
in addressing the
issues?
Do you believe that
vulnerability of a
credit union’s
financial condition in
adverse market
movements?
Does your bank facilitate the
appropriate interest rate in
deposits?
Pearson
Correlation 1 -.112 .010 -.136 -.112
Sig. (2-tailed) .171 .905 .098 .171
N 150 150 150 150 150
Are the online operations
performed by your bank is
quite satisfactory?
Pearson
Correlation -.112 1 .113 -.025 1.000**
Sig. (2-tailed) .171 .169 .759 .000
N 150 150 150 150 150
Do you feel safe while making
transactional operations?
Pearson
Correlation .010 .113 1 .008 .113
Sig. (2-tailed) .905 .169 .919 .169
N 150 150 150 150 150
Is your banks asset liability
management units play main
role in addressing the issues?
Pearson
Correlation -.136 -.025 .008 1 -.025
Sig. (2-tailed) .098 .759 .919 .759
N 150 150 150 150 150
94

Do you believe that,
vulnerability of a credit
union’s financial condition in
adverse market movements?
Pearson
Correlation -.112 1.000** .113 -.025 1
Sig. (2-tailed) .171 .000 .169 .759
N 150 150 150 150 150
**. Correlation is significant at the 0.01 level (2-tailed).
95

Interpretation
The correlation value in the case of the variables ‘online operation performed by the bank is
quite satisfactory’ and ‘safety that people feel while making online transaction’ is 0.113, which
is quite low. This means that online operations performed by the bank do not play any role in
making people safe. The correlation value in the case of the variables ‘asset and liability
management role in addressing issues’ and ‘interest rate given by the banks’ is -0.25, which
means that there is no correlation between the two variables.
96

Regression
Hypothesis
 Null hypothesis: There is no mean significant difference between interest rates and
revenue of commercial banks in Tajikistan.
 Alternative Hypothesis: There is a mean significant difference between interest rates
and revenue of commercial banks in Tajikistan.
4.29 Model Summary
Mod
el
R R
Square
Adjusted
R Square
Std. Error
of the
Estimate
Change Statistics
R Square
Change
F
Change
df1 df2 Sig. F
Change
1 .180a .032 .012 1.269 .032 1.628 3 146 .186
a. Predictors: (Constant) Do you believe that vulnerability of a credit union’s financial condition in adverse market
movements? Is your banks asset liability management units play main role in addressing the issues? Do you feel safe
while making transactional operations?
4. 30 ANOVAa
Model Sum of Squares df Mean Square F Sig.
1
Regression 7.867 3 2.622 1.628 .186b
Residual 235.226 146 1.611
Total 243.093 149
a. Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
b. Predictors: (Constant), Do you believe that, vulnerability of a credit union’s financial condition in adverse
market movements? Do your bank’s asset liability management units play main role in addressing the issues?, Do
you feel safe while making transactional operations?
97

4.31 Coefficientsa
Model Unstandardize
d Coefficients
Standar
dized
Coeffic
ients
t Sig
.
95.0%
Confidence
Interval for
B
Correlations Collinearity
Statistics
B Std.
Error
Beta Low
er
Boun
d
Uppe
r
Boun
d
Zer
o-
orde
r
Parti
al
Part Tolera
nce
VIF
1
(Constant
) 2.838 .339 8.37
9
.00
0 2.169 3.508
Do you feel
safe while
making
transactional
operations?
.025 .084 .024 .297 .76
7 -.140 .190 .010 .025 .024 .987 1.01
3
Is your banks
asset liability
management
units play
main role in
addressing
the issues?
-.138 .081 -.139
-
1.70
4
.09
0 -.298 .022 -.13
6 -.140 -.13
9 .999 1.00
1
Do you
believe that,
vulnerability
of a credit
union’s
financial
condition in
adverse
market
movements?
-.121 .084 -.119
-
1.44
6
.15
0 -.286 .044 -.11
2 -.119 -.11
8 .987 1.01
4
a. Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
98

4.32 Excluded Variablesa
Model Beta
In
t Sig. Partial
Correlation
Collinearity Statistics
Tolerance VIF Minimum
Tolerance
1
Are the online operations
performed by your bank
is quite satisfactory?
.b . . . .000 . .000
a. Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
b. Predictors in the Model: (Constant), Do you believe that, vulnerability of a credit union’s financial condition in
adverse market movements? Is your banks asset liability management units play main role in addressing the
issues?, Do you feel safe while making transactional operations?
4.33 Collinearity Diagnosticsa
Model Dimension Eigenvalue Condition
Index
Variance Proportions
(Constant) Do you feel
safe while
making
transactional
operations?
Is your banks
asset liability
management
units play main
role in
addressing the
issues?
Do you believe
that
vulnerability of
a credit union’s
financial
condition in
adverse market
movements?
1 1 3.489 1.000 .01 .02 .01 .02
2 .238 3.826 .00 .01 .44 .51
3 .204 4.136 .00 .71 .13 .26
99

4 .068 7.150 .99 .26 .42 .22
a. Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
From the table 4.29 above, it can be observed that value of R is 0.180 and value of R-squared is
0.032. This means that there is less correlation between the variables, and only 3% of variation
of the dependent variable is explained by the independent variable. The value of the level of
significance is 0.186>0.05, which means that there is no significant correlation between the
variables. It can be said that the interest rate given by the commercial bank is not affected by the
vulnerability of the financial condition of the banks, asset liability management or safety that
people observe while making transactional operations. The null hypothesis is not rejected.
Qualitative Data Findings: Interviews
4.3 Themes
4.3.1 Theme 1: Impact of liberalisation on commercial bank lending rates
Liberalisation is a term where most of the private industries or sectors are allowed by the
government to do business in the nation. Liberalisation leads to the removal of obstacles to
establishing their business. The impact of governmental plans and policies are significantly
affecting the banking sector in the country. Changes in taxation, exchange rates of as well as
interest rates in the operations significantly affect operational practices of private banks. All
interviewees agreed with this statement. It has also been proved by the regression analysis and
other approaches that interest rates have a direct impact on bank revenues.
As stated by a CEO,
“I have analysed that the main motive of these banks is based on retaining higher
profitability as well as higher consumer satisfaction index. If customer will be satisfied, it
will promote positive word of mouth marketing of the company name. This will help them
in appropriate growth in sales or revenue. The deregulatory authorities stated in country
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have made huge impacts on changing operational variations as well as development of
various aspects.”
Moreover, in considering the banking preferences, there will be higher concerns relevant to
generating profits as well as reducing the costs implied in each banking activity. It has been
analysed that in October 2008, there was a total debt of US$700 million in the cotton sector
which was funded in consideration of pledges and guarantees by the National Bank of Tajikistan.
Thus, these were the initiatives which were taken by banks in the context of promoting the
agricultural sector in the country, on which the creditors ought to have received marketable
securities as compensation. In this case, debts were owned by investors in financing the cotton
sector in the economy. Thus, in 2009, government of Tajikistan continued to facilitate funds in
the agricultural sector with the help of commercial banks without restricting or limiting the
borrowings to cotton growers. Moreover, there have been various steps taken by NBT in respect
of liberalising the export of cotton.
There are impacts of raising competition in the nation which will affect operational policies for
banks. in terms of the scenario during the global financial crisis, enhancing the sales in banks for
meeting market competition, bankers have facilitated loans with lower interest rates. Thus, due to
these impacts, there was no money left in the banks or in circulation (Ramlall, 2017). Moreover,
people at that time made investment in real estate, which resulted in a reduction of the monetary
circulation. Therefore, it led to a rise in the inflation rate, a reduction in GDP as well as an
impact on GFC in the economy. Tajikistan has witnessed various financial obstacles, as there is
higher competition and a rise in inflation resulting in higher interest rates.
On the other hand, competition in the banking sector has also affected poor mechanisms in
management and operations of firm. The impact of such increasing competition in operational
activities of the banking industry have negatively affected the operations of firms. In addition,
the rise in competition in the banking sector results in a reduction in interest, but on the other
hand, it leads to poor monetary circulation in the environment (Kwan, 2018).
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“I believe that countries like Tajikistan will have various issues or obstacles which will
result in inappropriate internal management which will affect the economic activities in
country, by manager”
4.3.2 Theme 2: Bank influences due to commercial bank lending rates
An analysis of respondents’ answers relating to their views and information regarding lending
rates fluctuations in banks was carried out. In this case, there have been various influences of
which distract banking operations that affect the overall operational activities. This mainly
affects the sales growth, efficiency, as well as preference of the industry. In addition, there are
various plans and policies which issued by the government, such as monetary policies, taxation,
economic changes, etc.
As was stated by a supervisor,
“I think the operational aspect of commercial banks is mainly relevant with providing
better banking services to investors. Thus, changing rates will affect a loan sum granted
by banks as well as terms for borrowing the amount.”
Banks borrow funds from other financial institutions, and this results in it uplifting its
operational aspects. The variations in inter-banking transactions bring them gains or losses
(Maxfield et al., 2018). There are various kinds of financing activities which need to be
undertaken with the motive of making appropriate changes and operations that will contribute to
the organisational review being managed. There are generally simple and compound interest
rates which are charged against the amount of the loan granted to a person.
Thus, on the basis of such interest rates, they have higher earnings and revenues for the
development of various operational practices. In particular, due to the accelerated inflation rate
indicates an expected decrease or appreciation in exchange rates (Mushtaq and Siddiqui, 2017).
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In other cases, the situation for enterprises that produce goods for export deteriorates and they
have reduced competitiveness in the world market.
A CEO stated that,
“, Exporting enterprises are forced to adjust the changed global economic condition
which increases efficiency as well as sales growth of products inside a country.”
In relation to the inter-bank clearing or credit settlements, there are several processes. This
includes principle of reliability, acceleration of settlement transmission, and expediency
(Sharofiddin et al., 2018). Therefore, such analysis helps banking organisations in terms of
having adequate operational analysis and management of various approaches.
However, the advantages of such transnational process are that banks charge lower rates in
clearing any account or making a profitable rise in the operational aspects. Along with this, there
will be a rise in operational efficiencies of banks, which in turn will be helpful for managing the
transactional obstacles (Martin et al., 2018).
4.3.3 Theme 3: The cost factors affect determination of lending rates in commercial banks in
Tajikistan
As per analysing factors which affects lending rates in banks are usually relevant with expenses
incurred during a period. However, there have been various determinants which create obstacles
in analysing the data set and team with banking operations as well as affecting lending rates. In
addition, there are influences of various cost factors and economic elements which affect the
lending rates. These include monetary policies, relationships with other nations, GDP, and
inflation rates.
These factors have negative as well as positive impact on the country, which bounds economists
for analysing the current scenario and planning for improving the internal environment. This is
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due to the dependency of this nation on other nations. Domestic strength is not evident in
retaining appropriate development in the economy of Tajikistan. Instability in the current
account of country will be managed through balancing payments and trades.
As stated by a manager,
“I believe that, raising volume of exports in comparison with imports will be profitable
in balancing trade practices and current account of economy. These are the accounting
factors which are affecting the economy, and which will reversely affect the interest rates
of the nation.”
There are a number of various factors that have an impact on identifying the interest rates in
Tajikistan. It comprises of various classification policies which are based on several activities,
such as the classification of banks and Tajikistan's classification theory (Ramlall, 2017). It is also
based on the current interest rate structure which helps to carry out a proper analysis of activities.
Supervisor stated that,
“There has been administration over controlling the interest rates as well as appropriate
wealth management with respect to manage operational demands in capital market.
Thus, in analysing the obstacles, there can be influences for adjusting the terms and risks
associated with business operations”
4.3.4 Theme 4: General factors relevant to the cost of loans
It has been analysed here that there are various general factors which affect the cost of loans in
an industry. If a bank borrows funds which are not capable of meeting costs in the future, it
creates obstacles in the banking operations of commercial banks. Thus, these are debts which
create issues in the survival of such financial institutions. The viability and capacity of firms in
terms of their financial structure define effective cost-efficient factors to improve business
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operations (Maxfield et al., 2018). In respect of granting loans to corporation as well as
individuals, charging a specific interest rate will bring profitable returns for a commercial bank.
However, controlling costs for issuing loans includes several factors such as executing interest
rates, preparedness for emergency, economic stability and fiscal performance of the nation, as
well as ascertaining debts. Thus, these are factors which need to be considered by the
government and professionals in banks in order to devise fruitful policies and operational
development in work culture (Mushtaq and Siddiqui, 2017). On the other hand, it will have
improve borrowing tendency as well as lending capacity of bank.
4.3.5 Theme 5: Influence of the national inflation rate on the central bank’s interest rate
policy and lending rate of commercial banks
Various factors that influences interest rate fluctuations in an economy need to be investigated
and ascertained. Therefore, impacts of inflation rate fluctuation in a nation have a positive and
negative impact on the lending proportion. Inflation in general terms is known as a rise in the
price of commodities, which is related to issues such as dependency and the poor currency rate
of a nation (Sharofiddin et al., 2018). Thus, in this approach, there are various issues such as the
dependency of Tajikistan on other nations in terms of obtaining natural resources, etc. These
create a reduction in the value of the currency compared to other nations, which in turn raises the
rate of inflation.
Consequently, it results in rising interest or lending rates in commercial banks. It comprises of
various factors such as fractional-reserve banking, quantity theory of money, interest rates, loan,
inflation and savings, quantity theory of money and federal open market committee (Martin et
al., 2018). Thus,
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“I believe that, ascertainment of the national growth with considering such factors will
help in uplifting economic conditions as well as bringing favourable gains to nation, by
supervisor”
The government of Tajikistan has huge gap of economic policies which create obstacles in the
banking industry. The main motive of economists in a country is basically to determine
appropriate resources to raise the value of the currency and reduce the rate of inflation. The
government mainly creates policies related to interest rates, taxation, export and import duties
which are analysed for balancing the current operations of the country. Therefore, frequent
changes in the operations of banking firms have also affected industrial policies. These changes
create hurdles to making efficient efforts in the banking operations. Moreover, in terms of the
impacts of GFC, there has been increase in inflation rates, unemployment and several
unfavourable economic rates which have affected the downfall of the economy.
“Employees of commercial bank stated that, there have been various reforms and changes
in the operational analysis and determination of accurate interest rates.”
4.4 Conclusion
This chapter has provided an analysis of the various findings related to the impact of interest rate
fluctuations in the commercial banks of Tajikistan. Thus, there have been impacts of various
techniques and operational practices which have helped in analysing several operations.
Moreover, of the research findings have generated various information which have represented
mixed reviews on outcomes such as the idea that interest rates in commercial banks will reflect
positively in rising revenue. Therefore, if banks charge higher interest rates for buyers on their
savings, it will enhance revenue retention in the industry. On the other hand, considering the
changes incurred in revenue, it can be said that interest rates will result in a reduction in revenue
of banking businesses. Borrowers of loans will not be interested in making any investment in
operations that affect negatively in terms of reducing the revenue of the industry. On the basis
the analysed data from the findings of the questionnaire and interviews with various
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professionals, it can be concluded that commercial banks in Tajikistan have influence on the
operational practices, which is basically through changing interest rates. Therefore, the analysis
has determined the various factors and opinions of professionals regarding their banking
practices and operational approaches made by their bank in the same aspect.
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CHAPTER 5: FINDINGS AND DISCUSSION
5.1 Introduction
This chapter consists of all the relevant information regarding the outcomes determined in the
previous chapter. There is a discussion of the reviews and opinion of professionals regarding
their banking operations. To analyse the impacts of interest rate fluctuation in the commercial
banks of Tajikistan which determines of above listed outcomes and reviews. Thus, it can be said
that, there are various reviews and opinions of professionals regarding banking activities and
organisational culture. In this aspect, it can be said that there are various reasons for which a
commercial bank makes changes in its lending interest rates . This will be due to retaining higher
earnings and operational gains on the collected amount of funds (Mandilaras, 2015). Similarly,
there can be rise in the operational gains and motives of business with respect to retaining
appropriate revenue for operational practices. The findings reflect that there is close relationship
between asset liability management in commercial banks and the level of safety of the
transactions provided by the bank. This is because if asset and liability management is proper,
then in that case the bank will be in good condition and on that basis, it earns substantial profit.
Earning a higher amount of profit leads to making considerable investment in technology, which
ultimately provides benefit to the people. This is also evident from the literature review ,where it
was identified that there are large number of people who believe that if bank is in profit, it will
make huge investment in its technology base, which ultimately provides safety to bank
customers.
In addition to this, competition in the environment is also an indicative term for enhancing the
interest rates. It motivates professionals operating in commercial banks to have higher
operational gains and large sales volume. Moreover, there have been influences of governmental
schemes and policies for citizens in terms of enhancing lending rates, on which they have
impacted changes in the rates on subsidised financial companies, which are mainly financial
institutions and operational units (Taguchi et al., 2015). These motives of governmental
authorities are in respect of balancing the inflation rate and exchange rate in the economy. Thus,
if there is a strong currency value in respect to USD, then there will be less inflation in the
nation. The dependency on other nations will be reduced, as it will enhance the per capita income
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as well as the purchasing power of individuals. According to Dash and Pathak (2016), asset and
liability management must exist in the company because if there is good management of both,
then the condition of the bank remains good in the volatile market. This is also indicated by the
findings, where it is identified that if any bank asset and liability management is good, then in
that case people feel safe to make transactions through a commercial bank. Thus, both studies on
this point have consensus.
If a bank offers customers higher interest rates, there will be an increased chance of having
appropriate profits in return. Considering such an approach will invite more and more potential
investors that will helps bank in generating appropriate capital gains. In commercial banks of
Tajikistan, to improve commercial activities and monetary circulation, this approach will help
personnel in the favourable accumulation of capital funds. The status and condition of banks
have an impact on consumers, as they opt for banks that have higher revenue and turnover in a
period. On the other hand, the status and image of banks raise consumer expectations. There can
be various tactics and strategic development in terms of improving the currency risk
management of firms. They also seek the returns they will receive through such investment.
Thus, banks have to offer consumers an adequate interest rate that will attract them in investment
terms. There has been a rise in the operational motives and level of gains in businesses. There
have been impacts of operational practices which are performed by banks. The motive of WTO
is to develop fair-trade practices and norms among the nation which will be adequate and
efficient in making proper operational development. Therefore, the main support of the WTO
had been based on making adequate increments in the economic condition of the nation.
5.2 Theme 1: Facilities provided by bank with relations to interest rate in deposits
In financial liberalisation, various financial institutions have made modifications to their lending
rates in a particular location of the economy (Mushtaq and Siddiqui, 2017). This impacts on
retaining higher revenue through borrowed funds. Moreover, it helps the banks to reduce their
repayment amount and enhances monetary circulation in a positive way, which is helpful and
adequate in uplifting operational gains and motives in the economy. Usually, financial
liberalisation is granted within the framework of the global approach of macroeconomic balance,
financial liberalisation and structural modifications. As a result of overall liberalisation, the
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economic situation of many enterprises deteriorates, and the total amount resources used to repay
bank loans is reduced (Bayat et al., 2015). In addition, various analyses have been made on the
theories presented by Keynes that point out that as an entity in investment markets improves,
there is an increase in the level of danger in the prevalence of speculative transactions in business
operations. Moreover, there will be development of the market for derivative securities (Tabit
and Moussir, 2016). The derivatives market allows financial institutions to redistribute various
types of risks, creating new instruments, thereby attracting new customers. According to the
responses to the survey, it can be said that there are various techniques which are being
implicated by small financial banks which helps them to mitigate the challenges incurred due to
changing interest rates. The results indicate that the interest rate on the commercial banks is
3.80%, which is lower than in countries such as India, where the interest rate on deposits is 7%
to 8%. The lending rate in Tajikistan is 13% and so, it can be said that there is huge difference in
the interest rate in respect of deposits and loans. Such a huge difference greatly affects people, as
they receive less on deposits and have to pay more on loans. It can be said that this situation in
Tajikistan is not good.
Newly entered banks into the market have charged higher interest rates. Such approaches will
help to integrate the large numbers of consumers or investors in the banks. They have increased
to retain higher profits from investment in banks. Thus, if the bank offers them higher interest
rates, there will be a chance of generating appropriate profits in return. Considering such an
approach will invite more and more potential investors that helps bank to generate appropriate
capital gains (Kwan, 2018).
In accordance with the safety concerns, there will be consideration of proper banking laws and
regulation which are being governed in Tajikistan (Maxfield et al., 2018). The management of
operational practices will help in upgrade security in the banks. Thus, investors will rely on the
banking operations and have trust in making investments in the banks. There will be
consideration of the methods of making transactional activities such as online and offline. Thus,
mostly, in the online transactional process there will be chances of having manipulation and
cyber-crime as a result of improper funding and operational administration (Sharofiddin et al.,
2018). While, the banks make necessary increments in the operational practices which will help
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them in governing the transactional approaches and make reliable changes in work practices. The
interest rates charged among inter-bank transactions, on the other hand, impacts consumers.
Thus, the higher inter-bank charges will also have an effect in a parallel manner by increasing
the interest rates offered to buyers. There will be negative impacts on people for having
ineffective increments in the financial conditions and operations.
The impact of banking status and condition have an impact on consumers as they usually go for
the banks which have higher revenue and turnover in a period (Taguchi et al., 2015). This
suggests that it would be profitable to invest in such banks. On the other hand, the status and
image of banks will have raised expectations among consumers. Therefore, they have to be
effective in terms of offering the relevant services among professionals, which in turn will be
useful for generating appropriate capital gains.
Moreover, financial inclusion will set the small banking units to expand their business in the
market. This is because their terms and consideration for operating the banking practices are
appropriate and liberal for borrowers. Attracting consumers by offering them higher interest on
their invested amount of funds in the banks will help the banks in generating appropriate equity
(Bobokhonov et al., 2017). Consequently, it will affect the number of borrowers in the firm.
Thus, the higher rates will also affect their capacity for making returns to the bank. Moreover. In
that manner there will reduction in the number of consumers to entity. On the other side, the
challenges and competition among banking businesses have been a challenging aspect which will
affect the lending operations of the firm. Therefore, the rise in competition levels also increase
interest rates (Khordehfrosh Dilmaghani and Tehranchian, 2015). This encourages banking
professionals for retaining the higher earnings and revenue from the external professionals which
in turn attentive towards generating higher profits.
There have been various other operations which are being provided to senior citizens such as
term deposits, fixed deposits, borrowing schemes and special interest rates on their invested
funds in the organisation (Kwan, 2018. There are benefits and adequate rises in the gains which
can make beneficiary improvements to the business. In addition, various social insurance claims
have been made by people with respect to their applied bonds, funds, and the finance ministry
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central treasury bonds. However, this will be the main aim of banks in terms of bringing the
satisfactory services to the senior citizens, as they have appropriate amount of retirement
monetary and are willing to make investments in the banks to secure their uncertain future
(Sharofiddin et al., 2018). Thus, the beneficiary rates and schemes need to be awarded to them
which will bring them higher satisfaction and operational gains that are incurred in managing the
operational activities.
Moreover, analysing the outcomes with statistical tools to identify the relationship between
interest rate and sales of commercial banks gave a Cronbach’s alpha value of 0.405 and 0.412.
Thus, this demonstrates that the data has less reliability. It can be ascertained between 0.60 to
0.70. Thus, less than 0.60 is treated as less reliable information.
5.3 Theme 2 : Satisfaction through online services provided by bank
To provide active structural reforms and implementing major projects in the framework of
financial policy. In the absence of other financial institutions, the main tasks of banks were, first,
allocation of public funds in form of centralised loans, and secondly, protecting domestic
producers, including new emerging industries, from external competitors by maintaining a high
level of preferential credit (Khordehfrosh Dilmaghani and Tehranchian, 2015). The solution to
these problems assumed administrative management of credit resources and a high share of
quasi-fiscal operations of the government in the banking sector. Moreover, enhancing credit
terms and term deposits in banks will be helpful in to attraction the debt management in
operational activities.
In respect of introducing reforms in economic activities, the financial market and the capital
market as synonyms need to imply a market for financial institutions that provide movement of
savings from those households and firms whose revenue exceeds expenses to those firms and
households that want to spend more than current income allows (Schnabl, 2017). The result of
functioning of the financial market at the turn of the 21st century was the deformation of its
economic role, the cause of which lies in the inherent volatility of the capital market, which
makes it possible to profit through speculation and not through use of financial resources in the
production process (Sharofiddin et al., 2018). The Tajikistan financial market belongs to an
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emerging environment, as it only originated around twenty years ago. Operational aspects in
every bank basically depends on the level of consumers generated and facilitated with borrowing
services. There can be an increment in and development of operational tasks that will help in
managing activities, as well as analysing the cultural needs of business.
Despite this, it was also affected by crisis shocks, which led to the intensification of government
actions to revise the financial market regulation system. Also, it is necessary to solve such
problems. By creating conditions for attracting domestic and foreign investments, increasing this
activity and developing small and medium-sized businesses with solving the problem of credit
availability for the real sector. Liberalisation is one of several steps taken to develop the financial
market in Tajikistan. Moreover, there will be a positive rise in Tajikistan’s GDP rate of as if the
government makes supportive plans and schemes in the banking sector, and it will enhance
growth in economy (Bobokhonov et al., 2017). These banks have been approached to facilitating
the appropriate loans and advances to small scale industries which gives them appropriate loan
advantage. This is inversely benefiting the nation by making qualitative increments in the
operational efficiency and generating employment opportunities in society (Ahmed, 2018). There
can be growth in the domestic production of the nation, which in turn has a positive impact on
the level of business activities.
To consider the operational gains in business which has led to a positive rise in banking
efficiencies, of various techniques and methods have been used to present an adequate analysis
of the data set (Thanh et al., 2017). In this process, there are influences of various aspects and
elements which have been used to examine the factors such as descriptive statistics, ANOVA
tests, T-test, Chi-square, etc. Therefore, such tests and statistical analysis will bring accurate
information relevant to the data set. Using such techniques has resulted in reliable and valid
information regarding the changes in lending rates by commercial banks.
Therefore, the main support of the WTO has been based on making adequate increment in the
economic condition of the nation (Mushtaq and Siddiqui, 2017). Therefore, economic
development will be related to appropriate trade practices among multiple nations which will
financially assist the operations and make appropriate application for improving domestic
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revenue (Thanh et al., 2017). Thus, financial support will help the country to have proper GDP
rates, which can help to improve small-scale industries. The development of small business will
rise the value of the currency and respectively control the interest rates in the market. The
impacts of financial development will be reflected in positive changes to all the segmentation.
The government will have enough funds to make appropriate development and analysis of the
issues.
Operating the banking services through online segmentation is a most convenient and new
approach which helps the organisation to retain adequate gains and facilitates management of
operational analysis. This is one of the key finding of the research. There can be manipulation or
fraud in the banking practices in relation to online transactional activities (Bobokhonov et al.,
2017). There are various areas which of main concern to the organisation in respect of banking
transactional practices, such as crime crimes and security related to transacting funds from one
location to another (Martin et al., 2018). There can be several issues and obstacles which can
have a negative impact due to uncertain and inadequate online operational management.
Professionals have presented their reviews on the basis of their satisfaction regarding the online
operation performed by the banks (Mandilaras, 2015). Thus, on reviewing the findings, it can be
determined that the majority of professionals are in favour of online services facilitated by their
banks. Thus, in Tajikistan the rise in digitalization has also had a positive effect in terms of
improving the banking operations in economy.
In addition, there are various benefits of involving digital influences in the banking and
transactional practices. It helps to administer transactions at any time and from any location
(Tabit and Moussir, 2016). There might be increments and growth in business efficiency, which
in turn have impacts on raising business efficiency. It will positively impact on bringing the
appropriate auditing practices which can be useful identifying the loopholes of risks associated
with the operations. Risks are related to the banking operations, economical consideration and
changes in the governmental plans and polices towards taxation, current exchange rates and
interest rates (Ahmed, 2018). Thus, this directly affects banking operations in terms of short- and
long-term policies. However, protecting banks from the direct influences of such market risks on
which they create separate risk management systems will protect the banking operation from
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external impacts. Thus, the creation of this shield will help investors to secure their money
invested by them in banks (Ramlall, 2017). If the bank become insolvent before declaring
insolvency, they will first make payments to their consumers on their invested money. Thus,
with such an approach to operational activities there will be separate risks which will protect and
prevent the banking operations from such external influences. There are various risk
management techniques which are practiced in banks, such as basis risk, yield risk and several
material risks.
The research also uncovered that management of such issues and obstacles will help the firm to
retain an adequate amount of gains and profitability. Thus, it will also help in managing effective
consumer relationships and improve the efficiency of banks in terms of meeting appropriate
growth by having effective financial control and management of various practices that can assist
professionals to attract consumers with profitable interest rates. However, the prices only fall as
per rise in yields which are particularly in bonds that have a long maturity and low coupon rates.
Thus, long term bonds of futures will have lower interest rates due to the longer duration a firm
has to make payment to an individual. Thus, this time duration advantage will help investors to
retain their profits for a longer period. The charges will help to improve revenue moreover,
impacts on operational issues. Mitigating the risks will result in higher revenue generation and
better operational administration, which will lead to the organisation being more successful.
There are several risks and issues which creates obstacles in the banking system which will be
helpful in governing and operating the banking tasks. Thus, there are transactional risks are on
the prime concerns. The security of funds invested by consumers in banks are safe and customers
can relay and trust on it. Therefore, the responsibilities of bankers and banking professionals are
to make appropriate increments in the revenue and growth of the firm’s operational efficiency.
Therefore, it is necessary for every banking institution to have separate risk management systems
which will be helpful to them in managing the obstacles as well as analysing the risks associated
in the banking business and to facilitate the disclosure of financial health of the business on
which such requirements will be helpful to manage and operate the banking activities.
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5.4 Theme 3: Securities with making transactional operations
In concerning the techniques which have been implicated by the banking organisation on which
they usually use value at risk which bring them uniformity in measuring the risks as well as
bringing the accurate analysis over the profit generated by the industry. Risk management units
have been enacting the techniques and methods for establishing the supervision of risk
management operations that will include responsibilities of managerial units regarding
transactional aspects and the security of the invested funds by the consumers in banking units.
Tajikistan usually has lower interest rates charges among the loan and borrowings taken by the
professionals. Thus, in consideration with such aspect people are less interested in investing the
funds in the banks. They are highly attracted towards investing the funds in the real estate and
shares which will bring them long term benefits. Therefore, to encourage the people in making
investment in the banking firm it is required to redevelop the policies as well as ensuring higher
security to their invested funds.
There are various banking operations in a firm on which various kinds of risks are being
associated with each department and piece of work. It can be said that. All the financial risks
which are being associated with the banking business such as credit risk, liquidity risks,
operational risks, market risks, computer system risk, legal risk and reputational risk. However,
in terms of credit risks there are several significant issues seen in the banking industries, such as
not becoming able to recover loans, restoration of business conditions, and circumstances
incurred with the counterparty and with the credit risks. Thus, in order to ensure there will be no
problem of cash management, commercial banks have to maintain assets and liabilities. This is
also evident from this research, where it is identified that asset and liability management matters
a lot for commercial banks. Banks have earning through facilitating the loan and lending money
among consumers and corporations, which will bring them earnings from interest. Therefore,
banks sometimes fail to recover the granted money to such individuals for various reasons such
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as the person is dead or insolvent. Similarly, the organisation has become insolvent and
therefore, there is no chance of recovering the loan amount. To overcome such risks, banks take
out guarantees to acquire the fixed assets of the respective concern which will bring them
support and techniques to overcome the credit risks associated with such operations.
In terms of market risks, there are various obstacles and issues incurred in market functions. The
fluctuation of the interest rates, currency values, stock prices, etc. all affect the economic
stability of the nation and also require banks to make changes in their operational policies.
Therefore, it can be said that as market risk is inherent in the banks’ operations, there will be
involvement of interest risk which affects the banking account, savings and loans by individuals.
Similarly, there will be a risk of fluctuation in the stock that is held by the banks in consideration
of the long-term investment. Thus, these are the market risks which affect a banking business. To
overcome such risks, there have been various obstacles and issues which need to be considered
by the banking professionals which are in motive for enhancing the techniques and methods to
overcome with such obstacles.
In relation to liquidity risks, there are various obstacles which affect the business operations,
such as managing the liquidity of the firm. Failure of banking professionals in managing the
short-term solvency and the ability to balance the current asset and current liabilities affect the
operational and management practices in a required period of time. In addition, banks offer
short-term loans to buyers which are somehow effective in retaining the higher returns and
quickly recovering the lent amount within a specific time period.
In the context of operating risks involved in the banking business, there are usually errors
incurred while making transactional entries. This can be through banking professionals or by the
errors incurred in computer devices. Theses technical errors will be resolved and overcome by
the banking professionals which can have impacts on managing the issues. Our research also
indicated in the literature review that banks develop their own in-house technology
infrastructure, but its maintenance is also very important, otherwise technical errors can occur in
the service and ultimately, customer encounter problems with online transactions. In addition,
there are obstacles connected with unethical conduct and relevant circumstances which affect the
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banking operations. Therefore, assessing the operational risks in the banking transaction will
help professionals to have appropriate ascertainment of transactional processes. Similarly, there
are risks related to computer devices used by the banking professionals in making inter-banking
transactions and facilitating internet banking for consumers, since they also consist of errors in
the system, and unethical conduct such as fraud, manipulation of funds, etc. These technical
errors are the prime concerns which affect operations and take time to resolve. To overcome such
issues, there will be requirement of having regular auditing of the system software. A regular
upgrade and installation of new software rise the level of performance and provide a quick
response to mitigating such technical risks.
Legal obstacles and influence of governmental plans and policies also affect the banking
operation in terms of inviting uncertainties for resolving problems. Influences of laws, rules and
reforms in the governmental policies are affecting banking operations. In Tajikistan the influence
of government and legal authorities are related to resolving financial issues and obstacles which
will be helpful in governing the business tasks. To bring stability to the banking operational
practices and preventing the firm from such risks, there is a need to be up to date with current
affairs and issues incurred in banks.
The installation of effective technical software and regular auditing of the accounts will benefit
the banking professionals in resolving the issues and mitigating the risks. Thus, in this case the
alternative hypothesis is accepted, and there is strong evidence against the null hypothesis. So, it
can be stated that there is a mean significant difference between the interest rate and the sales
revenue of commercial banks in Tajikistan. Additionally, it can be concluded that the changes
incurred in the interest rates of Tajikistan will eventually affect the sales revenue of the banking
industry.
5.5 Theme 4: Role of banks’ assets and liability management for addressing
financial issues
In accordance with analysing the concept there have been security system which are being
presented in the bank software that will protect the information from spams and external hackers.
There is an anti-virus software and malwares which protect the official site just to create a shield
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over the network and the users of the sites. In addition, there is an implication of various self-
generated pin numbers that create password of each individual with respect to make appropriate
operational analysis (Khordehfrosh Dilmaghani and Tehranchian, 2015). Therefore, as per the
epitomes there are mostly positive reviews which were retained by the researcher that
professionals believe that their banks are offering appropriate security in terms of monetary
transactions (Bayat et al., 2015). However, according to the literature was discussed that, buyers
or investors in any financial institution are seeking for proper security on their invested money as
well as desired of having higher returns against it. The influences of appropriate cyber security
will help in uplifting the business activities as well as management of several operations.
Improving the transactional operations with proper influences of the cyber securities. It consists
that there must be regular auditing of accounts which can be important and adequate in terms of
enhancing the operational activities as well as managing the business operations (Martin et al.,
2018). It is essential that the banks must keep proper cyber administration with regular audit and
management through technical professionals. The data are needed to be kept confidential which
is belongs to the funds of buyers. To retain the large number of investors for long term
operational support there will be requirement of bringing them appropriate satisfaction through
securities.
The development of various economic policies and plans will be based on considering the
monetary system in the nation. Thus, the impacts of such factors will be reflected in the
determining the appropriate techniques to control credit policies (Mushtaq and Siddiqui, 2017).
However, with the operational influences of principle guidelines of credit monetary and foreign
exchange policies of Tajikistan and which was formed in 2000 have facilitated various
guidelines to present the appropriate monetary as well as credit policies (Taguchi et al., 2015).
Thus, such monetary policy have been include various plans and approaches in terms of
managing the various factors. However, other than this, NBT have presented the interest of
creditors and investors for having appropriate financial stability and balance of banking system
functions. Implimentation of various software which will help the banking firm in keeping the
confidentiality in the data base which will be adequate in managing the operational practices as
well as administrating the circulation of funds (Bayat et al., 2015). Along with this there will be
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less influences and interaction of external parties in the banking operations. Thus, the
confidentiality of records will help in managing the appropriate consumer relationship. There can
be growth and profitability in the firm in terms of having smooth banking operations which will
assists the workforce in making qualitative efforts.
On review of literature it is identified that in order to provide more security to the mobile app
users and net banking users there must be secured log-in and accessing system which will bring
security cover to the investors. Every consumer has to be facilitated with the unique and different
PIN no. which must be based on their opinion and choices for the passcode. Therefore, the
confidentiality of such information will bring appropriate execution and control over the
manipulation and reliability of data base which will be useful for the banking business.
moreover., it will be suggested to the professionals that they must keep the records of all online
transaction and banking transaction performed each day. To bring the revolutionary changes in
the banking operations it is required that the professionals needed to be attentive towards
transactional details and confidentiality associated with it. The email addresses, mobile number,
account number and pin code etc. are to be kept secure and only in the reaches of the consumer
so they can easily modify and change as per their convenience. Implimintaion of anti-virus
software is mandatory as it prevents the network system and computers from phishing, malware
as well as from several other security concerns. Along with this, preventing the organisation
system from spyware which will help in protecting the data and ensures complete security. There
must be proper updates and notification to consumers based on changes made in banking system
and in the system software on which they access through computer of mobile phones.
However, bringing online banking operations will be more of a conveyancing technique, as it
will help professionals to analysing the financial position of the business in a required time
period. Cloud systems will help them to work from any place and access all the required
information in a limited time span. The conveyancing of such a system is for professionals and
consumers too. Making online payments and any banking operation becomes quick and easy,
which also prevents theft, manipulation and fraud in financial activities. People will have all
results such as their account statement, remaining balance and interest in their accounts each
time they operate any banking activities. On the other hand, the inter-bank transactional activities
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with which each computer devices are connected represent the appropriate overview over
business transactional activities. The payments made by professionals as well as in executional
consideration have reliable and profitable control over activities made in the firm. It requires the
appropriate execution by technical experts enrolled in the business, and they should be assigned
duties to analyse and detect any unethical issues incurred between banking operational practices.
The detection will help in governing practices and ensure satisfactory operational services for
consumers.
If banking organisations consider these appropriate transactional aspects, the chances of
encountering theft and manipulation will be reduced. The banking or financial risks in the
economy are consequently controlled, as the banks have appropriate operational analysis and due
care regarding activities. There should be records of past transactions, which will help them to
govern the targets and meet the operational gains in a limited time period. Every bank must
deliver site security, policies and disclosure to the consumers to communicate better terms and
conditions in the transactional process. E-banking is based on various laws, regulations, and
terms and condition to make the process smooth and convenient for the individual. Therefore, to
deliver adequate information to buyers, it is necessary to keep proper records of each transaction.
All the consumers which are enrolled in online business transactions should be given appropriate
information regarding the terms to help in reduce the risks of any financial obstacles. One can
easily make a claim in court and take advantages, such as refunds, discounts and allowances.
The rules and guidelines are facilitated by the financial services authorities which govern all the
transaction processes, as well as interest rates charged by bank on savings account, current
accounts and on loans borrowed by individuals. Professionals at commercial banks were asked
for their views regarding the interest rates charged by their banks on borrowed funds. However,
in relation to such aspects, the majority of respondents are in favor of their interest rates that are
charged by their banks on loans (Schnabl, 2017). This can be helpful to them in terms of meeting
business objectives. Therefore, banks have to be more reliable among their consumers in terms
of charging interest rates on their borrowed money. This is the main source for them in
generating the appropriate amount of revenue (Bayat et al., 2015). Tajikistan is one of the
leading Muslim nations, so there is a challenge that people belong to religion that does not
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consider charging interest as a good thing. Moreover, there will be challenges which are faced by
both Islamic banks and the conventional banking system.
Additionally, these challenges will be met if the commercial banks were to offer appropriate
interest charges on borrowed funds. Revenue generation and collection of appropriate funds will
result in stability in the capital structure and the management of the liquidity of funds. However,
the prices only fall in relation to a rise in yields, are particularly in bonds that have a long
maturity and low coupon rates. Thus, long term bonds of futures will have lower interest rates
due to the longer duration a firm has to make payments to an individual. This time duration
advantage will help investors to retain profits for a longer period. To preventing the cause of
financial crisis or any uncertain risks, banks need to have satisfactory policies that govern and
make appropriate administrative analysis (Khordehfrosh Dilmaghani and Tehranchian, 2015).
The amount of funds borrowed by consumers in a particular period will be helpful to the
professionals in acquiring adequate gains and managing operational analysis (Mandilaras, 2015).
Gains from operational practices will be helpful in managing the financial stability of the
operational functions.
The influence of the revenue-earning policies and techniques imposed by the government in any
economy consists of adequate changes in the operational administration. Thus, there are several
aspects which govern the transactional analysis and management of practices. However,
implementing adequate security among the consumers in relation to their invested money in
banks necessitates appropriate execution of the funds invested by them. Banks usually make
investment in various other aspects, such as investing in other banks or in the security market,
which ensures higher revenue generation. Thus, with the same aspects there can be a change of
retaining higher revenue along with highlighting the responsibilities of bankers in terms of
making payments of the revenue acquired through such operations. Thus, satisfaction of an
individual or a corporation with the banking services and interest is based on information
provided by them. Thus, investors seek for higher returns, lower risks and appropriate security
on their invested funds. If the bank declares themselves bankrupt, payment would need to be
made to the investors on the basis of their investment in the banks.
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The review of the literature indicated that in order to maintain asset liability, many banks start
charging higher interest rates so that losses caused by NPA can be covered. To meet the internal
banking competition, there is a higher chance of encountering tough competition in a manner
that banks charge higher interest rates on their services. These higher interest rates will bring
them higher revenue and increase their market value in the security markets. On the other hand,
as per considering the consequences incurred while the period of global financial crisis when
bankers used to charge lower interest to the consumer which results in them having a large
number of consumers, higher monetary circulation and higher trade practices. Therefore, after
such effects there is no money left in the banks for their operational activities and which caused
the global financial crisis, higher inflation and economic recession. Various nations were directly
and indirectly affected through such impacts, and consequently Tajikistan was indirectly
impacted.
Consumer satisfaction resulting from interest rates imposed by the government will be helpful
and adequate if they meet the operational targets at the right time. Borrowers seeking banking
institutions that offer lower interest rates for lending. Investment security is a prime concern that
will help to retain potential consumers on a long-term basis. Thus, according to the responses
from bankers, it can be said that the majority are satisfied with the interest rates charged by their
banks on borrowed funds by the investors. Thus, the stock market is based on assessing the risks
and managing the operational analysis.
There have been analysis over the bank’s assets liability management system in meeting the
financial obstacles of banks in an appropriate timeframe (Bobokhonov et al., 2017). Thus,
managing the current ratio is the prime requirement of every financial industry, who insist that
there must be appropriate funds management and administration of business requirements.
Therefore, such operations have been denoted as risk management as well as strategic planning
for the business. Tajikistan is an underdeveloped economy and has higher influences of rising
inflation rates (Taguchi et al., 2015). The causes are affecting operational phenomenon which do
not present appropriate information regarding the liquidity, interest rates, capital market risk and
appropriate funds management. According to the findings relating to this issue, professionals
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responded that their banks’ assets and liability management systems are capable of meeting the
financial problems.
In addressing the facts there have been implementation of various techniques and operational
establishment which are affecting the operational goals and managing business issues have been
considered to meet all the relevant risks (Khordehfrosh Dilmaghani and Tehranchian, 2015). The
main risks that are associated with banking businesses are related to the fluctuation in the current
rates, interest rates and changes in financial funding (Bayat et al., 2015). Therefore, these are
generally the obligations that the banks are incapable of meeting. Consequently, this will
challenge the bank’s financial conditions and will also affect the benchmark prices in the market
(Maxfield et al., 2018). Moreover, liquidity is related to the short solvency of the business. Thus,
if the business is capable of meeting the operational requirements at the right time, there will be
increase in the revenue and gains to the firm.
In terms of capital market risks, these are connected with the changes in the level of equity
generated by firms through investors on the basis of futures, bonds and securities (Mushtaq and
Siddiqui, 2017). There can be various tactics and strategic developments in terms of improving
the currency risk management of firms. They also seek the return they receive through such
investments. Thus, banks have to offer them an adequate interest rate that will attract them in
investment terms. There is a rise in the operational motives and increments in the level of gains
in business. There are impacts of operational practices which are performed by banks in having
inappropriate administration of operational practices.
Term deposits will be adequate in terms of generating an adequate amount of revenue. Term
deposits or short-term loans will be beneficial in terms of having higher revenue and easy
recovery of funds. Consumer-borrowed funds in the short-term will have higher interest rates
charged on them, which help the banks to gain appropriate revenue and better collection. It will
help the business in adequate financial governance in terms of executing the inflation rates, tax
advantages, security or volatility, flexibility or liquidity, growth and income, and the desire to
leave an estate and ease of management (Maxfield et al., 2018). However, as per analysing the
objectives of banks which are mainly focused and based on improving the funds and number of
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consumers the current ratio of institutions has to be adequate and appropriate which enables them
to meet the short-term solvency (Mushtaq and Siddiqui, 2017).
Additionally, it can be said that there is the potential for higher revenue generation by banking
institutions if they facilitate term deposits. The short-term period loans will be helpful as there
will be lower taxation rates charged on the gains. In addition, there could be an increase in
revenue or funds for the business, resulting in fruitful gains (Sharofiddin et al., 2018). From an
economic point of view, there will be higher security, as the banks will have quick returns on
their granted funds. Thus, such factors will have higher revenue generation.
5.6 Theme 5: Satisfaction through interest rate charges on borrowed money
There are various short-term investment options through which a business can acquire adequate
gains and achieve effective operational analysis, including bank fixed deposits that benefit the
banking organisation in terms of having appropriate liquidity, tenures, quick returns, as well as
taxation benefits. Investors have faced a dilemma of whether to make investment in long-term as
well as short-term operations. There have been increments in the gains and revenue of banks
which can be effective in uplifting the level of revenue retained by the business. In short-term
investment, there are mutual benefits to banks and consumers. They will receive a quick
response to the applied transactional process and acquiring funds. Banking businesses have
analysed the rates of making payments to their shareholders on the basis of their invested money
in the bank. They make enough money to pay their employees and maintaining the buildings to
run operations in the firm. They can gather appropriate amounts of money of have revenue using
several sources such as by charging interest on the funds they lend to individuals or corporations.
This is the main purpose of banking and the main source of acquiring revenue. On the basis of
such lending and facilitating borrowing, these businesses are able to have higher gains and
profitability. They can also achieve gains through charging fees on the services they offer to
consumers, such as transactional charges for inter-banking operations.
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In addition, they can also make money through the traditional financial instruments on which
they make operations in the financial market. To market the ownership of banks in the
proportionate manner, various investors will make investment to have appropriate acquisition of
funds. Therefore, banks also make investment in various other corporations and banks in terms
of receiving favorable returns on their invested money. Through such sources, banks will have
appropriate market share and a satisfactory amount of capital in the business. It is identified that
long term loan many times converted in to NPA. Such kind of things affect banks’ balance
sheets. Therefore, encouraging the consumers to undertake short-term borrowing will be helpful
to the banking industries in terms of having higher monetary circulation as well as earning
through the interest received by them. The biggest advantage of lending a short-term loan is that
there is a lower risk of having bad debt and fraud in financial aspects. The interest rate of return
in short-term borrowings are comparatively higher than the long-term borrowings made by
banks. Thus, there are higher chances of having high revenue and gains through the operational
practices. The short-term borrowings benefit from low risk and higher return. Moreover, in
relation to such benefits, it can be said that there are comparatively higher revenue and gains as
obtained by banks. There has been preparation of various informal and formal process by the
banks which are required for managing the risks. Therefore, the changes in interest rates will
affect the economy and society.
It can also be said that there is a need for making adequate operational analysis and
determination of the fruitful practices that have to be governed and managed by professionals
(Taguchi et al., 2015). Implementing a financial consumer protection scheme would useful for
retaining the trust and loyalty of consumers of banking services. This includes several areas that
should be considered by banking professionals such as an institutional framework, regulation and
legal influences. These can result in positive increments and a rise in the operational level of
business that would assist in the development of good governance and management of
operations. There will be influences of various consumer disclosure which deliver information
regarding the transactional practices performed by banks in a certain period (Tabit and Moussir,
2016). Clear information regarding operational practices will help in reliable auditing of all
accounts. Thus, the chances of funds being manipulated would be reduced, emhancing the
consumer relationship and financial governance in the firm (Kwan, 2018). Similarly, theses
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effective management practices would help to reward buyers for their investment and interest
rate allowances for their funds (Bobokhonov et al., 2017). On the other hand, to mitigate the
banking and interest rates risks, it is necessary to improve organisational performance. Thus, the
appointment of qualified and talented workforce for such practices would be adequate and
helpful to the firm in retaining the targeted goals at the right time.
Various issues have arisen due to protecting the consumers from financial that which are
connected with the financial structure of Tajikistan’s commercial banks (Schnabl, 2017).
Therefore, there is a need for clear responsibilities and capacity of the firm in dealing with the
financial obstacles. There have been negative impacts of improper execution of banking
operation which might bring hurdles and can damage the consumer relationship. If an investor
feels safe and secure regarding their invested funds, then they are more interested in making
investment in the industry. This requires appropriate cover and protection from external impacts
on their investments (Khordehfrosh et al., 2015). The National Bank of Tajikistan has been
making efforts to design new policies and frameworks for banking personnel. There will be
analysis over legality of power and resources which are to be used in performing the banking
tasks (Sharofiddin et al., 2018). Proper monetary administration and protection will be adequate
in guiding the business for having adequate cooperation and coordination to improve the
mechanisms and financial regulations for improving capacity in dealing with an effective
financial sector.
Alongside all this, the firm must have an effective dispute resolution system to receive consumer
feedback and make appropriate changes to the operational practices (Taguchi et al., 2015). This
will be helpful in determining any risk and loopholes that the banking firm has in its operations.
Thus, managerial professionals would be able to draft a new strategy and techniques to overcome
such issues (Bobokhonov et al., 2017). Moreover, such an approach will enhance the capabilities
of the firm in mitigating the challenges and improving the financial stability for the long-term
operational practices. Various operational as well as financial risks involved in the operational
practices of the banking organisation. Therefore, to mitigate such risks, there it is necessary to
develop a separate risk management system. The risks can be related to the credit risk, market
risk, operational risk, etc. thus, to meet such obstacles there will be necessary increments and
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development of plans which will be helpful in governing the tasks and operations in the firm.
Training and development of banking professionals with reference to meeting the challenges
need to be adequate, as there can be necessary increment in the operational practices and
governance of the operations (Redivision of the banking market going on in Tajikistan, 2017).
Professionals will have effective solution to each issue and that will help in governing in
financial aspects of firm.
Moreover, according to the multivariate test carried out to analyse and detect the variables, there
is no relationship between the interest rate and sales revenue of commercial banks in Tajikistan.
The significance value of the data set was 0.520, 0.050,0.367 and 0.520. The majority of
outcomes demonstrates to accept null hypothesis. Through this observation it can be said that
there is no influence of changes incurred in interest rates over the sales of commercial banks.
For developing the SME’s or entrepreneurs in small areas with granting them lower rate loans
(Tabit and Moussir, 2016). Thus, such grants help the locality in terms of having adequate
growth and development that results in beneficiary gains. It results in a rise in the flexibility and
liquidity in the economy, which will help to govern the individual risks, knowledge and
confidence management. There will be consideration of long-term borrowers. On the other hand,
it has been analsyed here that the credit union grants will reflect negatively in terms of reducing
market value of banks (Taguchi, Sahoo and Nataraj, 2015). Thus, banks will facilitate the lower
interest rates to provide appropriated funds to the small-scale industries.
There is ineffective and inadequate utilization of funds with lower returns by banks which results
in a reduction in the revenue or capital stability in firms and this leads to a reduction in the brand
value in the capital market. As a result of such impacts, there will be adverse market conditions
that damage the economy (Thanh et al., 2017). In the commercial banks of Tajikistan, the main
motive is to grant adequate loans and borrowings to the small-scale industries which will bring
them higher returns and adequate gains as a social responsibility (Khordehfrosh, et al., 2015).
Along with this, it will affect the economy, as banks will not have a sufficient amount of funds in
their reserves which can lead to financial crisis. There are higher corporate taxes which are
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payable by banks in terms of revenue gathered by banks for in appropriate business
administration.
It is necessary for banking organisations to be concentrated towards enhancing the profitability
and revenue gains through operational efficiencies. Therefore, lending the funds and having
revenue through interest rates will be adequate techniques in attaining business goals and making
appropriate efforts to generate revenue and make adequate gains through operational efficiency
of the firm. The main motive of the banking industry is to attract a large number of borrowers or
investors from which they can earn revenue through charging interest on such funds. Therefore,
various terms and policies have been designed by the banks or other financial institutions with a
motive to retain higher revenue and to compete effectively in the market. The differences in the
market value and rate of return affect the chances of having adverse market conditions for such
firms through fluctuations in the NPV of future cash flows. The higher interest rate risk will
negatively affect or threaten the earnings, liquidity and solvency of banking firms (Bobokhonov
et al., 2017). In addition, there are impacts of various issues in the interest level risks such as
non-offsetting effects on the assets, liabilities and derivatives of the organisation. However, the
material risks will have negative impacts on rising the issues and affecting the financial
institution for insecure and inadequate operational analysis (Maxfield, Wang and de Sousa,
2018). It is on the other side, it is known as the best sources for generating profits and having
appropriate gains that will help the organisation to retain adequate gains. It is necessary for
businesses to have appropriate risk management systems that will have positive impacts on
managing the issues and risks relevant with the financial operations (Sharofiddin et al., 2018).
There are several basic risks which need to be managed, such as yield curve risks which belong
to changing rate relationship between different maturities of same index that have adverse
impacts on income and economic value of the firm (Mandilaras, 2015). However, this curve will
reflect the adequate analysis and outcomes based in the capabilities of firm in mitigating the risks
at the right time. Therefore, the main motive of the industry is based on managing the
marketability and share value in the capital markets which will bring them large numbers of
investors who are keen to make appropriate investments in the business. The charges levied by
commercial banks as interest rates will be adequate and helpful in terms of uplifting the
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operational gains and managing the operational analysis. In banking organisations there are
various creditors and debtors and relevant accounts which have to be kept in the books. Thus, the
transactional entries of each accounts in a periodical basis need to be made (Kwan, 2018). This
will be a great method for removing all obstacles and issues which in turn will be helpful for
overcoming with the manipulation and material risks.
However, regular auditing of the bank accounts will be the best method for preventing the
business from any material and financial risks (Martin et al., 2018). According to the findings
based on the question that was put to the banking professionals at commercial banks, the
majority of respondents said they agreed that their banks have effective risk management
systems that help them to manage financial stability as the changes in interest rates did not
concern (Schnabl, 2017). Thus, the changes in governmental plans and policies, as well as risks
associated, in the business will have negative as well as positive influences due to changes made
in operational analysis and management of various industrial activities.
5.7 Conclusion
On the basis of this chapter, it can be said that the outcomes and opinion of various individuals
and the analysis made of the secondary research have been combined to ascertain the research
issues. The regression and correlations analysis of all five variables have determined that there is
no mean significant relationship between sales revenue in commercial banks and interest rates in
Tajikistan. However, the findings show an R value of 0.180, that is 18.0% of the data is related
to each other. Similarly, the significance value is 0.186 which is higher than 0.05. This
demonstrates that these variables are not correlated with each other as there is no relationship
between these variables.
On the other hand, in terms of considering the impacts of derivatives which ascertains that they
can impacts on limiting the downside earning exposures, increases yield, preserve higher earning
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potential and reduces income/ capital volatility. This will be a great source for a banking
institutions in generating an adequate amount of capital funds (Tabit and Moussir, 2016).
Moreover, it will affect the large portion of both sides of the balance sheet such as assets and
liabilities through limiting interest rates risk. Thus, the accentuated capital structure will have an
impact on the management of debts and the solvency of business, which will help consumers to
have appropriate rates charges over their borrowings. Reciprocally, it will affect the rise in
consumer retention and commercial activities of banks (Thanh et al., 2017). Every banking and
financial institution has backup plans which helps them to mitigate the challenges and risks.
There are several risks which create obstacles in the organisational performance of the business
(Ahmed, 2018). It can be relevant with the interest rates changes impacts over capital banking
operations that creates hurdles in the growth and operational practices (Bayat et al., 2015).
However, major number of responses are in favor of this statement that banking institutions in
Tajikistan have effective process for mitigating risks. In analysing the reviews of the
professionals form different commercial banks in Tajikistan on which they have various process
and approaches which have helped them in overcoming all the risks associated in the business.
however, there are several techniques which have been impacted by the banking professionals
such as buying interest rates futures (Maxfield, Wang and de Sousa, 2018). Thus, purchasing
shares on the interest rates which includes government bonds and interest rates futures.
Therefore, it enables the banks in lock in hedging their portfolios as well as lock in a certain
interest rate. Besides this, the purchase of shares will bring best returns which will result in
adequate gains and raises the operational efficiency.
To mitigate the risks there are further options that can be considered by the banking
professionals or investors, such as selling long term bonds. Therefore, there are various
individual investors which hedge against rising interest rates by selling bonds in the market
(Khordehfrosh et al., 2015). However, the prices only fall as per the rise in yields which are
particularly in bonds that have a long maturity and low coupon rates. Thus, long term bonds of
futures will have lower interest rates which due to the longer duration a firm has to make
payment to an individual. Thus, this time duration advantage will help investors to retain their
profits for a longer period (Mushtaq and Siddiqui, 2017). Thus, selling such bonds will bring
profits to the firm in a required time period. On the other side, buying a floating rate and high
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yield bonds hedge against increasing their portfolio from long- to short terms (Sharofiddin et al.,
2018). This includes floating rate bonds and high yield bonds. Thus, these are the strategies and
techniques which are usually governed and considered by banking professionals in terms of
overcoming challenges and mitigating the risks associated with banking operations.
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CHAPTER 6: CONCLUSION, CONTRIBUTION AND
RECOMMENDATIONS
6.0 Introduction
In this final chapter of the thesis, the research aim and objectives are restated and on the basis of
the analysis of the findings, the final conclusions are drawn. Finally, a recommendations section
is provided. In this chapter aim, objectives and findings of the study are given and explained in
detail. While formulating conclusion in a systematic way from varied sources information is
gathered and then its contribution to knowledge in terms of theory, methodology and practice is
explained. In addition, further research areas are also suggested in the report in respect of interest
rates and banks. The limitations of this study and opportunities for future research are discussed
in the subsequent sections. Personal experience that has been observed during the research
process is also explained.
6.1 Review of Research Aim and Objectives
Aim The aim is to analyse the impact of the variation in interest rate in commercial banks in
Tajikistan after accession to the WTO. A case study on commercial banks of Tajikistan
Objectives
 To study the current condition of interest rates in commercial banks in Tajikistan.
 To examine with theory, models and analysis in order to investigate the fluctuation of
interest rate.
 To analyse the impact of interest rate liberalisation in the financial system of Tajikistan.
 To compare the interest rate and liberalisation of Tajikistan with its neighbouring
nations.
These objectives are attain because scholar uses both primary and secondary data sources which
in turn assist to improve the results. It is so because with the help of primary study, scholar
conduct interview in which respondents provide valid results and this in turn leads to meet the
define aim. While through secondary data sources, theories are used which in turn leads to
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answer research questions. From the analysis of the data, it can be concluded that interest rates
on deposits are very low and interest rates charged on bank loan are high. The outcomes derived
from this research are summarised and consists of several parts, including the overall conclusion
of the research, the contribution of the research , as well as a set of recommendations for
banking professionals of commercial banks in Tajikistan, with respect to making revolutionary
changes in banking practices. To improve the potential and banking efficiency in the economy
there will be several suggestions put forward to them. This chapter will have effective
information regarding the analysis and findings of researchers with respect to meet the concrete
evidence.
There has been ascertainment of effective information regarding the banking system and
government plans to develop the banking system in Tajikistan. The problems and issues which
are faced by professionals in the industry need to be resolved and managed in an effective
manner. This chapter will also consist the information regarding the favourable suggestion which
are to be presented among the professionals to resolve the interest rate relevant obstacles as well
as techniques to overcome with them. There will be recommendation and analysis over the
contribution of researcher and professionals in the completion of this study.
6.2 Outcome of hypothesis tested
In terms of testing the hypothesis of this research, it has been found that there is no significant
difference between the interest rate and revenue earned by the banks. This means that when
interest rates are changed, there is no significant change in the revenue earned by the firm. To
analyse the impacts of variations in the interest rate changes in the commercial banks of
Tajikistan after impacts of accession of WTO on which study will highlight all the relevant facts
and obstacles. Thus, there had been examination over the obstacles and issues which were being
involved into practices and have affected the operations in banking system. Therefore, the aim of
report is for reaching to all aspects and issues which being faced due to changes incurred in the
interest rates in commercial banks. It has been analysed here that commercial bank makes
changes in the interest rates which are in relation with meeting the competition among market,
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increasing the financial stability, liquidity as well as attracting the large number of stakeholders
to the firm.
The government in Tajikistan makes various plans regarding revolutionary changes in the
economic conditions which will help in governing the operational activities of banks in respect
of improving GDP ratio, inflation control and raising the currency value in the international
market. Thus, such planning and operational needs reforms in banking practices. Increments in
the interest rates will have an impact on the operational tendency and performance, which will be
helpful in governing the tasks and managing the business issues. Main concerns and planning of
the government in terms of meeting the goals as well as reaching to the appropriate solution
which will be effective and adequate in analysing the current situation of the nation as well as the
financial changes in the international market. However, as per analysing the objectives of the
research projects on which it can be said that, the current study and the market conditions which
will be effective in analysing the interest rates in the commercial banks of Tajikistan with an
approach towards meeting the goals and making appropriate ascertainment of the operations.
In accordance with the proposed theories, models and analysis for investigating the occurrent
behind variations in the interest rate which have had addressed the issues faced by professionals
at commercial banks in Tajikistan. Therefore, the study has been based on considering the risks
and issues in the banking practices while making transaction entries as well as in generating
revenue. The interest rate charges, fees and various relevant transactional charges are the prime
sources through which a banking entity have become able to gather the relevant amount of funds
which have been reflecting the positive responses with impacts to have appropriate gains and
analysis over the database. To improve the operational efficiencies in the banking system on
which governance and policy making are the prime concern which are has to be acknowledged
by professionals.
After the accession of WTO there has been increment in liberalised banking and financial
operations in the commercial banks. It was a revolutionary change in operational practices which
have impacted on governing the tasks and managing the operations at the right time. The study
sets out to examine the degree to which theoretical underpinnings of the McKinnon and Shaw
135

framework manifest in the economy and further to examine the contribution of financial
liberalisation to economic growth. Also, this time period encompasses the pre-reform era which
signifies financial repression and includes post reform era that is indicative of financial
liberalisation. Prior to applying formal econometric methodology, it is important to ascertain the
behaviour of the data through the use of descriptive statistical tests and simple correlation. Co
integration allows analysis into the existence of a long run stable relationship between various
pertinent variables such as financial development proxies, financial liberalisation proxies,
interest rate, savings, growth and investment. Analysis over such facts and figures will be
adequate for reaching to the final solutions and suggesting to the professionals at commercial
banks in Tajikistan.
Thus, the outcomes determined that there have been huge impacts and variation incurred due to
changes have been made in the operational activities and the interest rates of the banks. There
will be influences of various consumer disclosure which brings information regarding the
transactional practices performed by banks in a certain period. A clear information regarding the
operational practices will help in making reliable auditing of all accounts. Thus, the chances of
having manipulation in funds will be reduced which accentuate the better consumer relationship
and financial governance in the firm. Thus, buyers will have effective trust as pert having
secured funds for operation.
6.3 Contribution to Knowledge
6.3.1 Theoretical Contribution
The interest rate fluctuations observed are time to time analysed from the perspectives of
commercial banks in Tajikistan. The operational activities of commercial banks are increased up
to a major extent because of fluctuation in the interest rate in effective manner. The framework
has provided with reference to finance and growth. McKinnon and Shaw developed this
framework for identifying enhancing growth effects made by financial liberalisation with
contrast to financial repression. They presented the argument that financial sector of the country
can effectively raise savings volume, quality and quantity of investment in the best manner
possible. It can be analysed that this theoretical framework has contributed in assessing effect on
operational activities of commercial banks in Tajikistan and as to how such fluctuations lead to
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affect operational efficiencies up to a major extent. Moreover, it can be said that if interest rate
fluctuation is reduced in the economy, financial sector may boom which will be beneficial for the
economy in effective manner. Moreover, role of financial sector is to enhance the flow of
savings by properly creating incentives.
Present research study indicates that for accomplishing higher amount of savings and increase in
rates of investment, abolishing interest rate ceilings is required. It is then advised for giving up
seignories by formulating adequate inflationary monetary policies in the best manner possible. It
can be analysed that real interest rate must rise to market clearing values and as a result,
increment in savings will be attained in effective manner. The significant factor behind the
theory is that temporary higher growth rates are being accomplished in it. Other developing
countries follow policy advice given by McKinnon and Shaw which results in accomplishing
significant elevation in growth rates and as a result, equilibrium is achieved between high and
moderate real interest rates. It has been predicted that financial liberalisation would lead to
reduction or slowdown of economic growth.
The financial repression has been major focus of McKinnon and Shaw as they have argued that
this policy leads to diminishing economic growth of the country in the long run. This is evident
from the fact that reduction in funds volume are attained which are available for investment
purpose. This means that investment is not injected and as a result, financial institutions cannot
perform adequately leading to hampering their economic growth up to a high extent. This is the
fact that was observed in the research study carried earlier. Present research study goes one step
ahead and indicate that low rate of interest on saving account motivate people less to deposit
cash in bank. Instead people prefer to make investment but many times they lose money in doing
so. Thus, investment reduced in the nation economy and due to this reason banks must increase
interest rate so that people can be motivated to deposit more money with commercial banks. It
can be ascertained that if the government of Tajikistan is not able to collect tax revenue, it then
imposes financial repression measure as an implicit tax on the financial sector. It can be assessed
that financial repression is severe form of restriction of financial and is adopted by government
when tax raising power is low. Reserve and obligations of holdings of government bonds help
concerned authorities for effectively diverting savings to public sector at low costs. The
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commercial banking sector is adequate for it as it becomes difficult for extracting seignories
from bond and equity market.
Scholar also uses the different theories such as Interest rate parity which helps to meet the define
aim. It is so because it analyse the relationship between the interest rate and currency exchange
rates which is different for all the countries and that is why for Tajikistan, there is a need to apply
the theory which in turn leads to attain the define objectives. On the other hand, Classical theory
is also used by the investigator in order to be the research authentic and with the help of the
current theory, scholar analyse the fluctuation rate within a country.
6.3.2 Empirical Contribution
With the help of the current research, scholar discusses the impact of interest rates on
commercial banks in Tajikistan in multiple ways. Hence, it is observed by the scholar that
interest rates greatly affect people’s saving habits and spending patterns. Thus, frequent changes
need to be made in the monetary policy of the nation. In the past, many studies were carried out
on the impact of interest rates on commercial banks in Tajikistan (Mushtaq and Siddiqui, 2017;
Khakimova, Solehzoda and Fasehzoda, 2018; Mogilevskii and Asadov, 2018). Such findings
were not demonstrated in any other research paper published on the same topic. In this research,
the relationship between interest rates and revenue earned by banks has been identified, which
has not previously been tested in any research paper. The findings indicate that there is no
significant difference between the variables.
In addition to this, with the help of the present study, scholar also contribute their best in
order to meet the define aim and answer the research questions as well. Further, it is also
analysed by the researcher that the findings clearly reflected that when the interest rate of the
country fluctuate there is a direct impact upon bank which will affected the overall spending of
the scholars.
6.3.3 Practical Contribution
The practices are being implemented show that the government of Tajikistan has joined the
WTO. The interest rate fluctuations in the country affects the commercial banking sector to a
major extent. It can be said that financial liberalisation has been applied, which provides clarity
138

that reforms will be attained in the banking sector, and stabilization would be accomplished in a
better manner. This does not mean letting go all of control, but includes a process of easing off
control of market forces quite effectively. This will initiate and impact Tajikistan’s economy,
which has previously been tightly controlled by the government and where is efficiencies are
needed.
On the other hand, statistical techniques have been applied which provides clarity that operations
of commercial banks are affected due to major fluctuations in interest rates and need to be
controlled in a better manner. This means that interest rates should be stabilised in a timely
manner so that operations are not affected, and profits could be generated by maximising
customer satisfaction in the best manner possible. Tajikistan’s accession to the WTO by will be
beneficial for correcting interest rate fluctuation and contribute stability in the financial market.
This means that commercial banks will be able to enhance inflationary measures and as a result,
operational activities will be enhanced in a better manner. Moreover, it can be said that firms are
required to provide efficiencies in a better manner. By adhering to the WTO accession rules, the
commercial banking sector will be able to attain efficiency, as interest rate fluctuations will be
handled in a better manner.
It can be said that financial liberalisation is beneficial for the firm, as restrictions on financial
markets and financial institutions are reduced or even eliminated. Moreover, it can be said that
banking firms will be able to enhance their position in the long run and as a result, efficiencies
will be gained in an effective manner. The resultant factor would be fruitful for the firm, as it
will be able to attain control over its operational activities and would potentially be able to serve
to customers with ease. Liberalisation would be fruitful for the overall economy of Tajikistan
and will initiate healthy growth in the banking sector and as such, efficiencies will be gained.
Commercial banks will be able to accomplish efficiency, and customers would be served with
better and superior services in an effective manner. Thus, it can be said that after accession to the
WTO, Tajikistan’s economy will rise.
Overall, it is stated that scholar put their 100% contribution is order to make the entire
research successful and also with the help of primary study, it is analysed that most of the
respondents are also answer in favour which in turn assist to meet the define aim and answer
139

research questions as well. Further, the study also provide an opportunity which in turn leads to
gain enough knowledge regarding the interest rate and how it impact upon the overall banks and
people life style. Hence, through both primary and secondary data sources, scholar reflect own
practical contribution and as a result, outcomes are generates in better manner.
6.4 Recommendations
Tajikistan has been facing various economic issues, of which interest rate fluctuation is a prime
concern of the government. It affects the GDP rate, inflation and creates poor financial stability
that has increased the price of commodities. Various recommendations are made to the
professionals of commercial banks in Tajikistan in relation to improving banking efficiencies and
managing the operational practices to ensure effective execution of banking operations.
Issues of banks losing potential consumers have risen in the past few years on which it is
required to introduce new and strategic plans to the public which will help them in governing the
operations. It will also be beneficial to the buyers to have faithful reliability over banking
operations so that they will feel secure regarding the funds invested by them in the banks. In
accordance with the various banking aspects, it can be said that there are several challenges and
obstacles which will be summative to professionals in meeting the targets and managing the
obstacles to overcome the issues. Several suggestions are presented by the researcher in terms of
improving the commercial banking system in Tajikistan. This research project has assessed
various issues which are being faced by banking industries in respect with the fluctuation in
operational practices. There are challenges that affect the banking operations on which interest
rates fluctuation are the prime concerns and obstacles stated in the market.
Mitigating banking challenges and improving the banking efficiencies will be effective in
analysing the issues and meeting targets at the right time. There is a need for strategic planning,
which will develop policies and frameworks for achieving operational targets and the expansion
of industrial operations. However, with respect to the obstacles there are several
recommendations which will be helpful to the banking professionals. These are set out as
follows:
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 There must be control and establishment of the regulatory authorities stated in country as
well as development of various aspects. Therefore, it is necessary that professionals be
attentive towards changing governmental plans and policies that will assist them in
overcoming the operational challenges. It has been found that changing plans will also
assist professionals in making revolutionary changes in the interest rates which have been
properly analysed in this research. Government plans and policies must be acknowledged
and as a result, fluctuations may be determined and mitigated to a major extent.
 There have been plans and revolutionary changes that have been considered by the
banking professionals in terms of other economic factors such as taxation, exchange rates
as well as various socio-economic plans which will help in bring stability to the
economy. In accordance with such variations, there will be an indirect impact on the
banking policies and procedures of undertaking operational practices in the market. As
the findings suggest, this will help to minimize the interest rate fluctuations and a result,
firms may be able to attain efficiency, and the economy may become stable.
 There must be use of effective promotional techniques in terms of communicating the
interest rates offered by the business with respect to meeting the targets in the right way.
According to the research findings, disclosing items to stakeholders enhances the level of
transparency with regards to financial performance of the company. The disclosure of the
financial statement and banking performance to stakeholders will provide them with
appropriate information regarding the performance and the profitability of the banking
industry and increase their faith and interest in the organisation.
 It is necessary that banking professionals implement a separate risk management system
in their banking operations that will mitigate the various external and internal risks to the
business. However, there are several obstacles which need to be meet by professionals
with respect to attaining the goals and meeting the targets at the right time. In accordance
with the research findings, by implementing a risk management system, the interest rate
risk can be mitigated quite effectively and thus, economic stability can be accomplished.
141

 Risks associated with the credit, market, finance and operations need to be accomplishes
by the banking professionals which will be helpful in terms of developing policies and
frameworks to eliminate such issues. The risks can be reduced but cannot be eliminated
in nature. Thus, it recommended that professionals to develop techniques ensure they are
well prepared and attentive to overcome such factors and obstacles.
 There must be improvements to the technical operations of the business, such as software
that is used in inter-banking transactions. The software applications should be simple and
easy so that they can be easily accesses by consumers and they will feel safe in
transacting funds.
 Ensuring proper security and prevention from cybercrime will help to create trust and
loyalty among the potential investors in banking firms. It will be adequate in monitoring
the database and managing the operations through such implementation.
 Determining the appropriate rate of interest charged on the services offered by banking
industry in respect retaining proper amount of revenue. Thus, consumers will be satisfied
with the banking activities, policies and schemes offered which will retain their trust and
faith in the organisation for making adequate ascertainment of the data to be analysed for
performing the research in the markets
 Installation of appropriate anti-virus software and regular auditing of banking operations
will be adequate in managing the obstacles and management of financial status of the
organisation in society. It will help banking professionals in terms of protecting
confidential information from unlawful and misrepresented information stated in the
business.
6.5 Limitations recognised in the research
In the process of conducting the research study on the challenges that commercial banks in
Tajikistan faced. There are several challenges faced by the researcher such as selection of
142

relevant sources, pressure from respondents who wanted to withdraw from the survey, data
collection as well as analysis to bring the accurate outcomes among the professionals in
commercial banks of Tajikistan. In order to examine the study financial market challenges
researcher faced some difficulties to get 150 questionnaires and 8 interviews completed
accurately. All the respondent who were participating during data collection most of them were
not completely honest, because they were afraid that someone would know or they will be fired.
Although, despite the fact that I explained that this is confidential information and no one will
know their details. After a while, many of them still sent an email to me in order not to
participate.
6.6 Recommendations for future research
As ascertainment of the outcomes will be effective and attentive to make better operational
analysis over data base. In the present research qualitative and quantitative techniques have been
used for collecting information and analysing the outcomes. SPSS has been used by researchers
in analysing the opinions of selected respondents on which it can be said that, there must be
implication of alternative techniques to tests the hypothesis. The question which were asked to
the professionals instead of primary analysis there must be collection of some real and relevant
data. It includes, economic elements such as GDP rates, inflation rates as well as interest rates
among the banking practices in Tajikistan.
6.7 Personal Reflection
During research study I learnt a lot about the ways in which research should be carried out. First
of all, I read various articles and journals and identified the main issues that are observed in the
current time period. Subsequently, the research aim and objectives were prepared, and I reviewed
a wide range of journals and in order to prepare the literature review section. It was a very tough
task to conduct the literature review because varied authors said different things on same topic.
Finally, I carried out data analysis by using statistical methods and prepared the
143

recommendations section. During the research, my data analysis skills improved. Prior to this
research, I did not have knowledge of Chi-square, correlation and regression analysis. While
doing this project, I tried to understand these methods thoroughly. Hence, I developed a broad
understanding of techniques and their assumptions, and this assisted me greatly in interpreting
the research findings in a better way.
144

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159

APPENDICES
Appendix A: Questionnaire
Demographic questions:
Question 1: Gender
Male ()
Female ()
Question 2: Age as per below listed group:
A. 20-29 ()
B. 30-39 ()
C. 40-49 ()
D. 50-59 ()
E. Above 60 ()
Question 3: Language you speak and understand?
A. English ()
B. Arabic ()
C. Urdu ()
D. Russian ()
Question 4: How qualified are you?
A. Doctorate in any field ()
B. Post graduate degree ()
C. Diploma ()
D. Graduate ()
Question 5: Period of organizational occupied land or building?
A. 2-5 years ()
B. 5-8 years ()
C. 8-10 years ()
D. More than 10 years ()
Likert Scale Questions:
1 = Strongly agree
2 = Agree
3 = Neutral
4 = Disagree
5 = Strongly Disagree
160

S.
No.
Questions 1 2 3 4 5 Total
1 Does your bank facilitate the appropriate
interest rate in deposits?
55 35 30 20 10 150
2 Are the online operations performed by
your bank quite satisfactory?
62 38 25 15 10 150
3 Do you feel safe while making
transactional operations?
50 40 30 20 10 150
4 Is your bank’s asset liability management
units play main role in addressing the
issues?
46 34 32 28 10 150
5 Do you believe that vulnerability of a credit
union’s financial condition in adverse
market movements?
62 38 25 15 10 150
Appendix B: Interview Questions
Question 1: What are your opinions towards impacts of liberalisation on commercial bank
lending rates?
Question 2: How do you find that your bank have influences due to commercial bank lending
rates?
Question 3: As per your opinion, what are the cost factors that affect determination of lending
rates in commercial banks in Tajikistan?
Question 4: What are the general factors which are relevant with cost of loans?
Question 5: Which are the inflation factors that affect lending rate determination?
Question 6: According to you, what are the impacts of banking industry competition that possess
variations in lending rates of commercial banks?
Question 7: What are the types of interest rate practices in your bank?
Question 8: According to you, what are the main features of interbank clearing and settlement
system? Do they have any influences as per changing lending rates?
Question 9: How interest rates are determined in Tajikistan? Is there any rate which are
administratively set?
Question 10: Do you believe that there are influences of the governmental policies in making
changes in commercial bank lending rates?
161

Appendix C: Interview Transcripts
Interview 1:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
Well as I have analysed, I think liberalisation is
the term where most of the private industries or
sectors were being banned by government.
Thus, it creates obstacles in their performance
and operational growth. Impact of
governmental plans and policies are mainly
affecting the banking sector in country.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
I believe that in analysing the answers of
various professionals which were being asked
these questions that have represented the
adequate determination of the facts. Thus, in
this case, there have been influences of various
factors which distract in banking operations
that affect the overall operational activities.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
I can say that in analysing the factor which
affect lending rates in banks are generally
relevant with expenses and operational
variations. However, there have been various
determinants which create obstacles in
analysing the data base and abounded banking
operations as with affecting lending rates.
Theme 4: The general factors which are
relevant with the cost of loans
I think it has been analysed here that there are
various general factors which will affect the
cost of loan in an industry. It creates the
obstacles in the banking operations of the
commercial banks as if the bank borrows funds
which is not capable of meeting such costs in
the future. Thus, these are the debts which
create issues in the survival of such financial
institution.
Theme 5: The inflation factors, that affect
lending rate determination
I believe that in accordance with analysing
factors which influence the interest rates in a
country. Therefore, impacts of inflation rate
fluctuation in a nation will have positive as
well as negative impacts on the lending rates.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
I believe that there are impacts of raising
competition in the nation which will affect
operational policies for banks. During the
global financial crisis when in motive of
enhancing the sales in banks for meeting the
market competition, bankers have facilitated
the loans on lower interest rates. Thus, due to
162

such impacts, there have been changes in their
lending rates for meeting challenges in the
market.
Theme 7: The type of interest rate practices
in your bank
Well I can say that, bank borrows funds from
other banks that will result in uplifting the
operational aspects of the banks. Thus, the
variations in inter-bank transactions there have
been various changes and variation which
brings them gains and losses on the same
respect.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
I think in terms of analysing the payment
system in Tajikistan where the main emphasis
of the government had been payable on the
realization and financing operation performed
in the country.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
Well, it has been consistency of various factors
which will have impacts on identifying the
interest rates in Tajikistan. It comprised of
various classification policies which have been
based on various activities such as bank's
classification as well as of Tajikistan's
classification theory.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
I think government in Tajikistan have huge
implications of policies which create obstacles
in the banking industry. The main motive of
economist in a country which is basically
determination of appropriate sources to rise the
currency value as well as reduction in the
inflation rate.
Interview 2:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
The changes in taxation, rate of exchange as
well as interest rates in operations are mainly
affecting operational practices of private banks.
I believe that such influences have uplifted
level of competition among banking firms as
well as which impacts lending rates.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
I believe that it mainly affects the sales growth,
efficiency as well as preference of industry.
The rise in interest rates which have impacts on
reducing public borrowings as well as increases
the debts of industry.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
I have analysed that it mainly includes the
merger and acquisition of small banking units,
intensity of capital exertion by creditors in
163

operational administration, policies for
enhancing risk reduction arrangements.
Theme 4: The general factors which are
relevant with the cost of loans
The viability as well as capacity of firm in
terms of financial structure will define effective
cost-efficient factors to improve business
operations.
Theme 5: The inflation factors, that affect
lending rate determination
Inflation in general terms is known as rise in
prices of commodities which is relevant with
issues such as dependency as well as poor
currency rate of nation.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
Thus, due to some impacts, there was no
money left in the banks as well as in
circulation.
Theme 7: The type of interest rate practices
in your bank
There have been various kinds of financing
activities which are needed to be done with the
motive of making appropriate changes and
operations that will lead in managing the
operational analysis.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
In relation with ascertaining the inter-bank
clearing or credit settlements, there are several
processes. This includes principle of reliability,
acceleration of settlement transmission and
expediency.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
It can be said that it is based on current interest
rate structure which will help in making proper
analysis of the activities.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
Government mainly creates policies relevant
with interest rates, taxation, report and import
duties which were analysed for balancing the
current operations of country.
Interview 3:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates.
The main motive of these banks is based on
retaining higher profitability as well as higher
consumer index. This will help them in
retaining appropriate growth in sales or
revenue.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates.
There are various plans and policies which
were being stated by the government such as
monetary policies, taxation, economic changes,
etc.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan.
There have been influences of various cost
factors and the economic elements which affect
lending rates. It includes the monetary policies,
164

relationship with other nations, GDP and
inflation rates.
Theme 4: The general factors which are
relevant with the cost of loans
In respect with granting the loans among
corporation as well as individual which will
have impacts on raising the funds of
organisation. Moreover, borrowing a certain
amount of loan will require the payments of
such borrowed amount in a required period.
Theme 5: The inflation factors, that affect
lending rate determination
In this approach, there has been various issues
such as dependency of Tajikistan over other
nations in terms of obtaining the natural
resources. These create reduction in the
currency value as compared with other nation
which in turn accelerates inflation rate.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
People at that time have made investment in
real state which results in reducing the
monetary circulation in countries. Therefore, it
brings rise to the inflation states, reduction in
GDP as well as GFC impacted in economy.
Theme 7: The type of interest rate practices
in your bank
There are generally simple and compound
interest rates which have been charged against
the amount of loan granted to a person.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
Such analysis helps the banking organisations
in terms of having adequate operational
analysis and management of various
approaches. However, the advantages of such
transnational process are like banks charge
fewer rates in clearing any account or making
profitable rise in the operational aspects.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
There has been administration over controlling
the interest rates as well as appropriate wealth
management.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
Frequent changes in the operations of banking
firm which have affected policies as well.
Interview 4:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
The deregulatory authorities stated in country
have made huge impacts on changing
operational variations as well as on
development of various aspects.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
The operational aspect of commercial banks is
mainly relevant with providing better banking
services to investors. Thus, the changing rates
165

will affect the loan amount granted by banks as
well as the terms for borrowing the amount.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
Thus, such factors have negative as well as
positive impacts on country which bound the
economists in analysing the current scenario
and planning for improving the internal
environment.
Theme 4: The general factors which are
relevant with the cost of loans
Controlling the costs of lending the amount
which is incorporated with several factors such
as executing the interest rates, preparedness for
emergency condition, economic stability,
analysing the fiscal performance of the nation
as well as ascertaining the debts.
Theme 5: The inflation factors, that affect
lending rate determination
Impacts of rising the interest rates or lending
rates among commercial banks. It comprises of
various factors such as fractional-reserve
banking, quantity theory of money, interest
rates, loan, inflation and savings, quantity
theory of money and federal open market
committee.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
Tajikistan has been engaged in various
financial obstacles as there is higher
competition as well as rise in inflation results in
enhancing the interest rates.
Theme 7: The type of interest rate practices
in your bank
On the basis of such interest rates, they have
higher earnings and revenue for development
of various operational practices. In particular,
due to the accelerated inflation rate as
compared to the expected decrease, as well as
the appreciation of the exchange rate.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
There will be rise in the operational efficiencies
of the banks which in turn will be helpful for
managing the transactional obstacles.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
In respect to manage the operational demands
in the market. Thus, in analysing the obstacles
there can be influences for adjusting the terms
and risks associates with business operations.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
As per analysing the impacts of GFC attacks in
the country, there has been rise in the inflation
rates, unemployment and several unfavourable
economic rates which have affected operations
of firm.
Interview 5:
166

Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
As per considering the banking preferences,
there will be higher concerns relevant with
generating profits as well as reducing costs
implied in each banking activity. It has
analysed that in October 2008, there was a total
debt of US$700 million on the cotton sector
which are extremely funded in consideration of
pledges and guarantees by National Bank of
Tajikistan.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
Through such sources the banks will have
appropriate market share and satisfactory
amount of capital in the business. therefore,
encouraging the consumers to make short term
borrowing will be helpful to the banking
industries in terms of having higher monetary
circulation as well as earning through interest
received by them.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
The growth rate in Tajikistan is not so
appropriate which states that small and medium
sized industries are not capable of retaining the
higher revenue as compared with the
multinational industries.
Theme 4: The general factors which are
relevant with the cost of loans
These are the factors which are needed to be
considered by the government and
professionals at banks for making fruitful
policies and operational development in the
work culture.
Theme 5: The inflation factors, that affect
lending rate determination
The biggest advantage of lending the short-
term loan is that, there will be lower risks of
having bad debts and frauds in financial
aspects.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
Competition in banking sector has also affected
poor mechanism in management and operations
of firm. The impacts of such rising competition
in the operational activities of the banking
industry have negativity affected operations of
the firm.
Theme 7: The type of interest rate practices
in your bank
In the latter case, the situation of enterprises
that produce goods destined for export
deteriorates, as their competitiveness in the
world market falls. Exporting enterprises are
forced to adjust to the new condition increase
efficiency, sales growth of products inside the
country.
167

Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
There has been consideration of “contracts of
services on interbank settlements”, the banks
stated in country transit funds from one branch
to another.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
The interest rate of return in short-term
borrowings are comparatively higher than the
long-term borrowings made by banks. Thus,
there are higher chances of having high
revenue and gains through the operational
practices.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
There have been various reforms and changes
in the operational analysis and determination of
accurate interest rates.
Interview 6:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
these was the initiative which have been taken
by bank in context with promoting the
agriculture sector in country. Thus, on which
the creditor was ought to receive the securities
as compensation.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
The short-term borrowings are benefited with
the low risk and higher return. Moreover, in
relationship with such benefits it can be said
that there are comparatively higher revenue and
gains as obtained by banks.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
It is due to dependency of this nation on other
nations. The domestic strength is not
appropriate in retaining appropriate
development in the economy of Tajikistan.
Instability in the current account of country
which will be managed through balancing the
payments and trades.
Theme 4: The general factors which are
relevant with the cost of loans
It will have prolonged to improve the browning
tendency as well as lending capacity of the
bank.
Theme 5: The inflation factors, that affect
lending rate determination
Ascertainment of the national growth with
considering such factors will help in uplifting
the economic conditions as well as bringing
favourable gains to the nation.
Theme 6: The impacts of banking industry The rise in competition in the banking sector
168

competition that poses variations in the
lending rates of commercial banks
will bring reduction in the interest but on the
other side, it will affect the poor monetary
circulation in the environment.
Theme 7: The type of interest rate practices
in your bank
There has been preparation of various informal
and formal process by the banks which are
required for managing the risks. Therefore, the
changes in interest rates will affect the
economy and society.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
The impact of banking status and
condition which have impacts among the
consumers as they usually go for the banks
which have higher revenue and turnover in a
period.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
Thus, which reflects that it will be
profitable to make investment in such bank. On
the other side, the status and image of banks
will have risen expectations among the buyers.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates.
They have to be effective in terms of offering
the relevant services among professionals
which in turn will be useful for generating
appropriate capital gains. Thus, adequate
interest rates will also be accentuating to firm
in having extra and fruitful returns which will
enhance strength of organisation in mitigating
the financial risks.
Interview 7:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
rates
In this case, debts have been owned by
investors in financing cotton sector in the
economy. Thus, in 2009, the government of
Tajikistan was continuing to facilitate the funds
in agricultural sector with the help of
commercial banks without restricting of
limiting the borrowings to cotton growing.
Moreover, there had been various steps which
were taken by NBT with references to
liberalise the export of cotton.
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
Moreover, the financial inclusion will
ascertain the small banking units to make trade
practices in the market. It is because their terms
and consideration for operating the banking
practices are appropriate and liberal for the
borrowers.
Theme 3: The cost factors that affect
determination of lending rates in
Raising the level of export’s income with the
imports. These are the accounting factors
169

commercial banks in Tajikistan which are affecting the economy and which
will reversely affect the interest rates of the
nation.
Theme 4: The general factors which are
relevant with the cost of loans
By luring the consumers as per offering, them
the higher interest on their invested amount of
funds in the banks will help the banks in
generating appropriate equity.
Theme 5: The inflation factors, that affect
lending rate determination
Adversely, it will affect the number of
borrowers in the firm. Thus, the higher rates
will also affect their capacity for making
returns to the bank. Moreover. In that manner
there will reduction in the number of
consumers to entity.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
Countries like Tajikistan will have various
obstacles which will result in inappropriate
internal management which will affect
economic activities in country.
Theme 7: The type of interest rate practices
in your bank
On the other side, the challenges and
competition among banking businesses have
been a challenging aspect which will affect the
lending operations of the firm. Therefore, the
rise in competition level also increase the
interest rates
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
It encourages banking professionals for
retaining the higher earnings and revenue from
the external professionals which in turn
attentive towards generating higher profits.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
There have been various senior citizens which
were being facilitated with the pension scheme
presented by government on the basis of their
services and efforts made in jobs. Thus, the
level of job done by them as well as the level of
efforts made by them have been converted into
the revenue payable by the government
throughout their life
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates
Along with them there will be beneficiary from
their family which are a dependent person such
as their wives or children as per asking the
professionals that how satisfy their consumers
with the pension schemes offered by their bank
Interview 8:
Questions Answers
Theme 1: Your opinion towards impacts of
liberalisation on commercial bank lending
Therefore, in Tajikistan commercial banks have
several operational activities which are
170

rates benefitting the buyers with securing their funds
as mentioned in their bank accounts. Thus, it
has been believed by the professionals which
are operating the banking activities in the
commercial banks of Tajikistan believes that
they are offering appropriate pension schemes
to their consumers and they are satisfied with
the banking policies and regulation in this
approach
Theme 2: How do you find your bank have
influences due to commercial bank lending
rates
The government as well as commercial banks
are capable of meeting the requirement of
senior citizens in terms of benefiting them with
pension services.
Theme 3: The cost factors that affect
determination of lending rates in
commercial banks in Tajikistan
There have been various other operations
which are being awarded among the senior
such as terms deposits, fixed deposits,
borrowing scheme as well as special interest
rates on their invested fund in organization
Theme 4: The general factors which are
relevant with the cost of loans
There will be benefits and adequate rise in the
gains which can make beneficiary
improvements in the business.
Theme 5: The inflation factors, that affect
lending rate determination
there have been various social insurance claims
have been made by people with respect to their
applied bonds, funds, and the finance ministry
central treasury bonds.
Theme 6: The impacts of banking industry
competition that poses variations in the
lending rates of commercial banks
The impact of banking status and condition
which have impacts among the consumers as
they usually go for the banks which have
higher revenue and turnover in a period
Theme 7: The type of interest rate practices
in your bank
Thus, which reflects that it will be profitable to
make investment in such bank. On the other
side, the status and image of banks will have
risen expectations among the buyers.
Theme 8: The main feature of interbank
clearing and settlement system. They have
any influences as per changing lending
rates.
Therefore, they have to be effective in terms of
offering the relevant services among
professionals which in turn will be useful for
generating appropriate capital gains.
Theme 9: The process for interest rates
determination in Tajikistan and
identification of rates which are
administratively set
adequate interest rates will also be accentuating
to firm in having extra and fruitful returns
which will enhance strength of organisation in
mitigating the financial risks.
Theme 10: There are influences of the
governmental policies in making changes in
commercial bank lending rates
the financial inclusion will ascertain the small
banking units to make trade practices in the
market. It is because their terms and
consideration for operating the banking
171

practices are appropriate and liberal for the
borrowers.
172

Statistics
Does
your
bank
facilitate
the
appropri
ate
interest
rate in
deposits?
Are the
online
operation
s
performe
d by your
bank is
quite
satisfacto
ry?
Do you
feel safe
while
making
transactio
nal
operation
s?
Is your
banks
asset
liability
managem
ent units
play main
role in
addressin
g the
issues?
Does the
pension
schemes
award
by your
bank is
satisfact
ory
among
consume
rs?
Does
your
bank
have any
separate
risk
managem
ent
system?
Does
your
bank
offer
satisfact
ory
interest
rates
charges
on the
borrowe
d
money?
Did your
bank
offer
term
deposits
with
respect
to make
appropri
ate
revenue?
Do you
believe
that,
vulnerabi
lity of a
credit
union’s
financial
condition
in
adverse
market
movemen
ts?
Does
your
organizat
ion have
any
material
risk
relevant
with
interest
rate risk?
Does
your
bank
have a
formal
process
in
mitigati
ng this
interest
rate
risk?
N
Valid 150 150 150 150 150 150 150 150 150 150 150
Missi
ng 0 0 0 0 0 0 0 0 0 0 0
Mean 2.29 2.15 2.33 2.48 2.33 2.15 2.29 2.48 2.15 2.29 2.33
Median 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
Mode 1 1 1 1 1 1 1 1 1 1 1
Std. Deviation 1.277 1.252 1.251 1.283 1.251 1.252 1.277 1.283 1.252 1.277 1.251
Variance 1.631 1.567 1.566 1.647 1.566 1.567 1.631 1.647 1.567 1.631 1.566
Range 4 4 4 4 4 4 4 4 4 4 4
Percenti
les
25 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00
50 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00
75 3.00 3.00 3.00 4.00 3.00 3.00 3.00 4.00 3.00 3.00 3.00
Appendix D: Frequency Analysis:
173

Parameter Estimates
Dependent Variable: Does your bank facilitate the appropriate interest rate in deposits?
Parameter B Std.
Err
or
t Si
g.
95%
Confidenc
e Interval
Parti
al Eta
Squa
red
Noncen
t.
Param
eter
Obse
rved
Powe
rLow
er
Bou
nd
Upp
er
Bou
nd
Intercept 2.8
00 .395 7.0
88
.0
00
2.01
9
3.58
1 .257 7.088 1.000
[Did your bank offer term deposits with respect
to make appropriate revenue =1]
-.1
26 .436 -.2
89
.7
73
-.98
8 .735 .001 .289 .060
[Did your bank offer term deposits with respect
to make appropriate revenue = 2]
-.6
53 .449
-
1.4
53
.1
48
-
1.54
1
.235 .014 1.453 .303
174
Descriptive Statistics
Mean Std. Deviation N
Does your bank facilitate the appropriate
interest rate in deposits? 2.29 1.277 150
Are the online operations performed by
your bank quite satisfactory? 2.15 1.252 150
Do you feel safe while making
transactional operations? 2.33 1.251 150
Is your banks asset liability management
units play main role in addressing the
issues?
2.48 1.283 150
Do the pension schemes awarded by your
bank are satisfactory among consumers? 2.33 1.251 150
Does your bank have any separate risk
management system? 2.15 1.252 150
Does your bank offer satisfactory interest
rate charges on the borrowed money? 2.29 1.277 150
Did your bank offer term deposits with
respect to make appropriate revenue? 2.48 1.283 150
Do you believe that vulnerability of a
credit union’s financial condition in
adverse market movements?
2.15 1.252 150
Does your organization have any
material risk relevant with interest rate
risk?
2.29 1.277 150
Does your bank have a formal process in
mitigating this interest rate risk? 2.33 1.251 150

[Did your bank offer term deposits with respect
to make appropriate revenue =3]
-.6
44 .453
-
1.4
22
.1
57
-
1.53
8
.251 .014 1.422 .293
[Did your bank offer term deposits with respect
to make appropriate revenue =4]
-.9
79 .460
-
2.1
26
.0
35
-
1.88
8
-.06
9 .030 2.126 .561
[Did your bank offer term deposits with respect
to make appropriate revenue =5] 0a . . . . . . . .
a. This parameter is set to zero because it is redundant.
b. Computed using alpha = .05
H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
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k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I H j k l b n m f g h y u I o l k j h g f d c v b n m k j h g f d r t y u I
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