Special Reports on Financial Stability
The special reports on financial stability accompany the publication of the Financial Stability Report and provide a more detailed analysis of certain aspects and risks that are relevant to the stability of Colombia’s financial system, such as market liquidity risk, market risk, credit risk, debt burden, real estate and the mortage markets in Colombia, international indicators, concentration and competition in deposit and credit markets, corporate sector surveys and financial inclusion.
The special reports on market liquidity risk, market risk, credit risk, debt burden, and real estate and the mortgage markets in Colombia are published semi-annually in June and December. The special reports on international indicators, concentration and competition in the deposit and credit markets, and corporate sector surveys are published annually, in December. The special report on financial inclusion is published annually, in June.
By monitoring the liquidity conditions in financial markets, it is possible to identify the contingencies an institution might face when accessing or granting resources. These, in turn, might threaten the stability of the financial system if a significant proportion of the transactions are dependent on the timely payment of their obligations. The Special Report on Market Liquidity Risk offers an analysis of government bond liquidity in Colombia (TES) and the money market. The first section evaluates TES liquidity by analyzing the depth of the market and measurements such as the bid-ask spread (bas). The second section offers a description of the money market in Colombia based on a network analysis intended to identify its structure and examine the relationships between market players.
The purpose of the report is to measure the transmission of volatility that exists between the public debt, private debt and equity markets, so as to determine if a market, at a given point in time, was a generator or a recipient of volatility. Subsequently, the value at risk (VaR) of the proprietary portfolio, at one day, is estimated for the three markets, as is the impact a possible materialization of market risk would have on the balance sheet of the entities in question.
Monitoring credit risk is essential to preserving the stability of the financial system. The analysis presented in the Special Report on Credit Risk examines the recent performance of key quality indicators for each type of loan, such as risk indicators, non-performing loans (NPLs), NPLs by operations, as well as the probability that a loan will migrate to a better or worse credit rating.
An analysis of household debt has become more relevant in recent years as a result of credit institutions’ exposure to this sector, which is at record highs for the last decade. Households are also the main clients of financial institutions in the solidarity sector and family compensation funds. This report offers a detailed analysis of household borrowing based on information from the Survey of Household Financing Cost and Financial Education (IEFIC). The objective is to complement the Financial Stability Report, which also contains a study on the financial situation of these agents.
The joint dynamics of the housing market in Colombia and mortgage loans are analyzed in this report to identify potential sources of risk that could affect economic and financial stability. Specifically, it looks at the performance of variables associated with the price of real estate, financing for real estate, sales and supply levels in the market for new homes, and the time it takes to sell or rent used properties, among other aspects.
The main financial indicators for Central America, Panama and the Dominican Republic, some South American countries and Mexico are analyzed in this report. Indicators of portfolio performance, risk management, profitability and efficiency are taken into account to evaluate the situation of credit institutions in the region.
The extent of concentration in credit and deposit markets is analyzed in this report, given its importance in terms of credit risk and liquidity risk. Additionally, an analysis is done to determine the degree of competition among financial intermediaries in the credit market.
The findings of annual surveys conducted by Banco de la República on currency risk and the structure of financing, based on a representative sample of companies in the Colombian economy, are analyzed in this report to broaden what is known about corporates’ financing and use of FX derivatives.
Financial inclusion is the process of integrating financial services into people's everyday economic activities, which can contribute to economic growth to the extent that it reduces financing and transaction costs, and provides for secure and efficient resource management. Measuring financial inclusion involves different dimensions in terms of access to and use of financial products. The report is intended to address a number of aspects associated with financial inclusion and access to financial services in Colombia.