SPECIFIC FEATURES OF COMMERCIAL BANKS’ ACTIVITIES IN PROJECT FINANCING BASED ON PORTFOLIO INVESTMENTS

Abstract

This article examines the role of commercial banks in financing projects based on portfolio investments, the theoretical and practical aspects of this mechanism, and the opportunities for enhancing investment activity in the national economy through the banking sector. The study provides an in-depth analysis of optimizing capital flows directed to the real sector of the economy via portfolio investments, improving the efficiency of commercial banks’ investment activities, and diversifying investment risks. At the current stage, most commercial banks in the country operate as universal banks. This is explained by the relatively advanced development of the banking system, the high level of diversification of asset and liability operations, and the functional integration among various banking services, which together contribute to greater profitability. However, the process of financing projects through portfolio investments in commercial banks still faces a number of systemic and organizational challenges that limit the full functioning of investment mechanisms. The article explores the strategies for forming investment portfolios in commercial banks, the criteria for assessing the financial sustainability of investment projects, modern approaches to risk management, and innovative financing models applied in international banking practice. It also presents the author’s proposals for expanding portfolio investments, strengthening banks’ capital bases, improving mechanisms for attracting long-term resources, and enhancing the monitoring system of investment projects. The findings of the study indicate that increasing the volume of portfolio investments in commercial banks contributes to accelerating economic growth, stimulating private-sector activity, implementing high value-added projects, and promoting the development of the capital market. This approach not only strengthens the financial stability of banks but also enhances the investment attractiveness of the national economy.