Baku: Azerbaijan requires enhanced financial instruments to bolster the development of small and medium-sized enterprises (SMEs), according to a report by the Asian Development Bank (ADB). The financial sector in Azerbaijan is predominantly controlled by banks, with 95% of the sector’s assets held by these institutions. Four major banks account for 70% of these assets, with the largest being a state-owned entity.
According to Azeri-Press News Agency, ADB pointed out that despite the availability of secured loans for SMEs, there is a significant absence of innovative financial products that could facilitate the growth of these enterprises in both domestic and international markets. This gap is reflected in the fact that SMEs contributed only 18% to Azerbaijan’s GDP in 2023.
The ADB report also highlighted the underdeveloped state of Azerbaijan’s capital market, citing that stock market capitalization was merely 4% of GDP by the end of 2023. Conversely, the insurance market in Azerbaijan is experiencing growth, with assets reaching approximately 1 billion US dollars, equivalent to 1.5% of GDP. Life insurance products dominate the insurance sector’s market share, indicating a positive trend in this area of the financial market.