Macro-Prudential Assessment of Colombian Financial Institutions’ Systemic Importance

Three metrics are designed to assess Colombian financial institutions' size, connectedness and non-substitutability as the main drivers of systemic importance: (i) centrality as net borrower in the money market network; (ii) centrality as payments originator in the large-value payment system network, and (iii) asset value of core financial services. Two systemic importance indexes are calculated based on two different aggregation methods for the three metrics: fuzzy logic and principal component analysis. The resulting indexes are complementary and provide a comprehensive relative assessment of each financial institution's systemic importance in the Colombian case, in which the choice of metrics pursues the macro-prudential perspective of financial stability. They both (i) agree on the skewed (i.e. inhomogeneous) nature of systemic importance and its approximate scale-­free distribution; (ii) on the preeminence of credit institutions as the main contributors to systemic importance, and (iii) on the non-trivial importance of a few non-banking institutions