Changes in Colombian Financial Markets Over the Past Decade

Abstract

This note describes some of the most important changes that have occurred in the Colombian financial system over the past decade. It begins with an assessment of the growth of shadow banking, together with an analysis of the main risks that have emerged in the shadow banking sector and a description of recent regulation aimed at addressing those risks. Following that, salient changes in the balance sheet structure of the traditional banking system are described, together with the risk implications for banks. Then, the paper analyses the issuance of domestic and foreign bonds by Colombian corporations. Finally, the paper examines the way foreign capital inflows feed into local bank deposits in order to assess the relevance for Colombia of the risks highlighted by Powell (2014).

Full publication: What Do New Forms of Finance Mean for EM Central Banks?

Keywords: financial system, shadow banking, bonds issuance, corporate debt

JEL Classification: G20, G21, G28, G30