DIVERSIFICATION OF BANKING ACTIVITIES AS A STRATEGIC MECHANISM FOR ENSURING STABILITY AND RISK MANAGEMENT IN THE COMMERCIAL SECTOR

Abstract

This article explores the diversification of commercial banks' activities as a crucial factor
for ensuring their stability amid increasing competition and economic transformation. It examines various
directions of diversification—including types of operations, foreign currency reserves, investment
instruments, and geographical expansion. Special emphasis is placed on diversification as a risk
management tool to enhance banks’ adaptability and maintain financial sustainability. The article provides
an overview of international practices and evaluates the ongoing reforms in Uzbekistan’s banking system.
The author argues that competent diversification reduces specific risks, improves bank competitiveness,
and supports sustainable development of the financial sector.