Investment policy of the banking sector: data from Russia

Abstract

The growing investment activity of banking sector organisations is an important condition for securing diversification of assets and obtaining additional sources of income, as well as maintaining the required level of liquidity. Economic crises and instability of stock markets affect the investment policy of a bank, the quality of its investment portfolio, and the scope of investment transactions with securities. The purpose of the research is to carry out a comprehensive analysis of the investment mechanism of the Russian banking sector and its organisation, to characterise the investment policy and risks connected with investment activities, to determine the criteria for financial instruments included in the structure of investment portfolios of Russian credit institutions. The authors used the analytical, regulatory, comparative, and statistical methods of research to define the dynamics, composition, and structure of investment portfolios and risks involved in the business of financial and credit institutions, in the course of the formation of investment policy. It was concluded, as a result of the research, that enhanced performance, stability, and liquidity of credit institutions were conditioned by the structure and quality of portfolio investments. Improving the efficiency of the banking investment mechanism is a priority area of development, for strengthening the competitive positions of credit institutions in the national banking system. The article presents conclusions regarding the quality of investment operations and transactions with securities effectuated by banks at the present stage. The authors undertook a comparative analysis of indicators characterising the structure of investment assets of the banking sector, grouped by types of investment portfolio. Proceeding from the above, particular directions were developed for practical use, that allow for efficient selection of stock market instruments for inclusion in the investment portfolio of credit institutions in the conditions of high volatility and uncertainty of the financial market.