Economic Papers No. 13, April 2015
By Yelena Vorobey
Accounting for trillions of assets worldwide, banking systems are crucial components of the global economy. Commercial banks are just one part of the range of financial institutions, which also includes investment banks, insurance companies, finance companies, investment managers, and other companies that profit from money flows. As financial intermediaries, banks are placed between depositors who sup-ply capital and borrowers who demand capital and have productive uses for it. The result of successful banking system development is a steady long-run economics growth for a country. It is thus useful for other countries to have a study of a small, developing country with an emerging banking system, so that they can see the difficulties involved and the progress that can be won. Kyrgyzstan, being a small and open economy, presents some peculiarities in its banking sector, which was established relatively recently. This research aims to analyze the main problems the sector is facing and propose policy recommendations by presenting the historical background and current situation of banking system in Kyrgyzstan.