THE IMPACT OF INEFFECTIVE INVESTMENT PRACTICES ON THE RECOVERY OF UKRAINE’S ECONOMY

The mobilization of idle capital in Ukraine is of paramount importance in the context of post-war recovery, structural modernization, and long-term economic resilience. A significant share of household financial assets remains outside the productive financial system, stored in the form of foreign currency cash or short-term deposits that do not contribute to investment activity. Simultaneously, banks demonstrate an institutional tendency to invest in low-risk instruments such as domestic government bonds and central bank certificates instead of channeling funds toward private sector credit. This misallocation of financial resources indicates a deeper problem of inefficient intermediation and reflects the low level of trust in long-term financial products, limited investor protection, and underdeveloped capital markets. This paper explores the structural conditions and behavioral drivers that contribute to the persistence of nonproductive saving strategies in Ukraine’s financial system. The article focuses on the broader macroeconomic implications of such practices and argues for the necessity of comprehensive institutional reform to redirect uninvested capital into productive use. While monetary stability remains a policy priority, its side effects—including sterilization of liquidity through risk-free instruments—require a balanced approach that accounts for the investment needs of the real economy. The study outlines potential policy solutions such as the introduction of medium- and long-term investment accounts with preferential tax treatment, the creation of incentives for investing in domestic corporate securities, and the development of public-private financial instruments to attract household savings into capital formation. The expansion of financial literacy initiatives and the use of digital investment platforms are also critical for enhancing financial inclusion. Mobilizing internal resources through capital market development and pension reforms is essential for achieving sustainable and inclusive economic growth in Ukraine’s post-crisis environment.