THE RELATIONSHIP BETWEEN INFLATION AND FINANCIAL SECURITY

Abstract

This study examines the relationship between inflation and selected dimensions of financial security in Kazakhstan, the Kyrgyz Republic, and Uzbekistan during 2014–2023. Financial security is treated as a multidimensional concept and is represented by two indicators: household consumption expenditure growth and domestic credit to the private sector. Inflation is used as the main explanatory variable, while GDP growth, unemployment, and personal remittances are included as control variables. World Bank data are analyzed using panel-data regression methods. The results show that inflation has a weak positive association with household consumption growth and is statistically significant at the 10% level, while no statistically significant relationship is found between inflation and private-sector credit. GDP growth has a strong positive relationship with consumption growth, and remittances are positively associated with private-sector credit. These findings suggest that inflation does not have a uniform effect on the selected dimensions of financial security and that broader macroeconomic and household conditions also play an important role. The study concludes that assessing financial security requires a multidimensional approach rather than relying on inflation or a single financial indicator.