THE INVESTMENT ACTIVITY OF COMMERCIAL BANKS AND THE ROLE OF SECURITIES IN ASSET STRUCTURE: A POST-TRANSFORMATION ANALYSIS OF UZBEKISTAN'S BANKING SYSTEM

Abstract

This study evaluates the investment activity of commercial banks and investigates the strategic significance of securities within bank asset portfolios, specifically focusing on the ongoing financial transformation in the Republic of Uzbekistan. Structured under the strict IMRAD format, the paper presents a highly expanded Literature Review that integrates foundational financial intermediation theories, modern portfolio optimization frameworks, and contemporary empirical findings on bank asset quality. Analyzing data from the Central Bank of Uzbekistan up to the 2024–2026 fiscal periods, the paper highlights that while credit risks are heavily prioritized, the strategic positioning of sovereign, municipal, and high-grade corporate securities remains an underutilized tool for portfolio insulation. The findings reveal that structural dependencies—exemplified by credit concentration where the top 50 corporate borrowers command 24% of total assets, and 77% of large loans are denominated in foreign currencies—can be mitigated through active balance sheet diversification into high-quality liquid assets (HQLA). Finally, the study offers targeted recommendations for deploying advanced risk-based pricing, predictive AI algorithms, and structural capital market tools to advance the systemic stability of transition economies.