This paper is a work in progress and tries to analyze briefly the literature, proposed hypotheses and methodology for assessing portfolio behavior of commercial banks in Tanzania. Many developing countries have adopted various measures for the economic and trade liberalizations including financial liberalization, Tanzania being unexceptional. Financial sector is believed to be the engine for the economy and economic growth. The liberalization of the financial sector took various forms involving local financial institution and multinational banks of various sizes. The assessment of portfolio behavior of the commercial banks has received little attention to these developing countries especially on the extent to which the commercial banks invest in various assets and the return they realize out of these investments. The literature suggests an optimal profit maximization model in portfolio allocation, by the use of both choice and non choice variables to be relevant in analyzing bank behavior. In the proposed study the researcher proposed the use of quarterly bank financial statements in a panel form for a period of over 10 years and inclusion of bank qualitative variables over the period of study, in a profit maximization equation.