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Using Bayesian estimation techniques, we estimate a small open economy DSGE model with credit-market imperfections for the Colombian economy. Using the estimated model we investigate what are the sources of business cycle fluctuations. We show that balance-sheet effects play an important role in…

Colombia experienced a deep recession in 1999-2003. Growth slowed by 4.2%, and investment by 34.6%. Was the severity of the recession due to a financial accelerator mechanism á la Bernanke, Gertler, and Gilchrist (1999)? To answer this question, this paper estimates a dynamic stochastic general…

This study uses a Dynamic Conditional Correlation multivariate GARCH approach for testing for contagion among Latin American financial markets to shocks originated in the United States and Europe. Using daily data on stock market returns for the period comprised between July 4th, 2001 and December…

We study …nancial crises in a small open production economy subject to credit constraint and uncertainty on the value of debt repayments. We …nd that the possibility of reducing the severity of future crises encourages the central planner (CP) to increase both the crisis frequency and current debt…

Abstract This paper estimates the effect of financial development on the transmission of monetary policy. To do so, the paper employs a panel data set containing financial development indicators, policy rates, lending rates, and deposit rates for 43 countries for the period 2000-2019 and applies…

In this paper we set up a small open economy model with financial frictions, following Curdia and Woodford (2010)’s model. Unlike other results in the literature such as Curdia and Woodford (2010), McCulley and Ramin (2008) and Taylor (2008), we find that optimal monetary policy should not respond…

 

Financial Inefficiency and Real Business Cycle in Colombia Financial Inefficiency and Real Business Cycle in Colombia      Camilo Zea*

Abstract: An audit study was conducted in Colombia following the protocols in Giné and Mazer (2017). Trained auditors visited multiple financial institutions, seeking credit and savings products. Consistent with Gabaix and Laibson (2006) and similar to Giné and Mazer (2017), the staff only provides…

In 2024, Colombia’s financial infrastructure provided its services adequately, supporting the normal operation of the payment system and financial market transactions, and contributing to the preservation of financial stability.See the report (ony in Spanish)

Financial Infrastructure in ColombiaPayment Infrastructure in Financial MarketsIn 2023, Banco de la República’s (the Central Bank of Colombia) large-value payment system (Deposit Accounts System or CUD in Spanish) showed greater dynamism.

The monitoring of the local financial infrastructure is an additional contribution of Banco de la República (the Central Bank of Colombia) to the country’s financial stability. One of the outputs of this monitoring is the Payment Systems Report, which from this edition onwards changes its name to…

Translation available since: 2016 | Periodicity: Annualy

Banco de la República's monitoring of the local financial market infrastructure is an additional contribution to the country's financial stability. One of the products of that monitoring has been the Payment Systems Report, which is now known as the Financial Infrastructure Report. The change in…

Each edition of the report has four objectives: 1) to publicize a consolidated account of how the figures for payment infrastructures have evolved with respect to both financial assets and goods and services; 2) to summarize the issues that are being debated internationally and are of…

This paper analyses the role of a costly financial system in the transmission of monetary policy. The new-keynesian model for a small open economy is extended with a simple financial system based on Hamann and Oviedo (2006). The presence of the financial intermediation naturally allows the…

Since: 2009 | Periodicity: Quarterly

Throughout the first quarter of 2021 (1Q21), financial markets revolved around increased optimism regarding expectations of a faster-than-anticipated global economic recovery, led by the US and China. This optimism stemmed from increased fiscal support, continued monetary stimulus, advancements in…

During the first quarter of 2025 (1Q25), global economy began to slow down, contrasting with the resilience observed in previous periods. This change was associated to new trade tensions between the US and its main partners, resulting in a downward revision of global growth expectations and an…

This paper has as main objective to build a composite metric of financial soundness for the private corporate sector in Colombia. Instead of relying on the individual and sometimes restrictive financial ratio analysis approach, the purpose of this document is to provide a single metric aimed at…

Financial stability is understood as a situation in which the financial system (institutions, markets, and infrastructures) complies with three characteristics:

Colombia’s financial system has undertaken major changes during the last decade, with new regulatory regimes being implemented, as well as a significant expansion of financial services. Nevertheless, the recent literature has yet to analyze this new epoch for banking institutions under an…

Translation available since: 2002 | Periodicity: Semesterly

The analysis presented in this edition of the Report concludes that the Colombian financial system continues to maintain adequate capital and liquidity levels that are not only above the regulatory minimums, but, in the aggregate, would even be sufficient to face the materialization of extreme low-…