The role of state ownership in commercial banks has significant implications for economic stability and efficiency. This study investigates the economic factors influencing the reduction of state shares in commercial banks in Uzbekistan. Utilizing data from the Central Bank of Uzbekistan from January 2018 to October 2023, we applied an Autoregressive Distributed Lag (ARDL) model and Structural Equation Modeling (SEM) to analyze the relationships between state ownership in commercial banks and various economic factors, including the inflation rate, average weighted interest rates on loans, and short-term deposit interest rates. The findings reveal that a 1% increase in the inflation rate leads to a 0.28% decrease in the capital of commercial banks with high state ownership. Similarly, a 1% increase in the average weighted interest rate on loans results in a 2.04% decrease in the capital of these banks. Conversely, a 1% increase in the short-term deposit interest rate causes a 2.52% increase in the capital of state-owned commercial banks. The results suggest that inflation negatively impacts the capital of state-owned commercial banks, while higher loan interest rates reduce bank capital due to increased borrowing costs. However, increased deposit rates positively affect bank capital by attracting more deposits and enhancing liquidity. Significant economic factors such as inflation, loan interest rates, and deposit interest rates influence the capital of state-owned commercial banks in Uzbekistan. Policymakers should consider these factors when developing strategies to reduce state shares in commercial banks, balancing the need for stability with market efficiency.