Macro-Prudential Assessment of Colombian Financial Institutions’ Systemic Importance

Three metrics are designed to assess Colombian financial institutions’ size,<br/>connectedness and non-­substitutability as the main drivers of systemic<br/>importance: (i) centrality as net borrower in the money market network;<br/>(ii) centrality as payments originator in the large-value payment system<br/>network, and (iii) asset value of core financial services. Two systemic importance indexes are calculated based on two different aggregation methods for the<br/>three metrics: fuzzy logic and principal component analysis. The resulting<br/>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.