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Using a panel of Colombian banks and quarterly data between 1996:1 and 2010:3, we study the relationship between short-run adjustments in bank capital bu¤ers and the business cycle. We follow a partial adjustment framework and control for several variables that have been identi…ed as important determinants of bank capital bu¤ers in previous studies, and …nd that bank capital bu¤ers vary over the business cycle. We are able to identify a negative co-movement of capital bu¤ers and the business cycle. However, we also …nd that capital bu¤ers of small and large banks behave asymmetrically during the business cycle. While the former appear to be constant over time, once the appropriate set of control variables is used, the latter present a countercyclical behavior. Our results suggest the possible need of the implementation of regulatory policy measures in developing countries. JEL Classi…cation: C26; G21; G28.

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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. An aggregated systemic importance index is calculated based on expert knowledge by using a fuzzy logic inference system. We use principal component analysis to calculate a benchmark index for comparison purposes. Overall similarities between both indexes put forward that expert knowledge aggregation is consistent with that based on a purely quantitative standard approach. Specific non-negligible differences concur with the nonlinear features of an approach whose intention is to replicate human reasoning. Both 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 macroprudential perspective of financial stability.The Basel Committee on Banking Supervision (2013) suggests adding two criteria (i.e. cross-jurisdictional activity and complexity) in order to attain banks' global systemically importance and the difficulty of resolving a systemic event. Because this paper focuses on nonglobal banking and nonbanking institutions' systemic importance, and as derivatives and other complex instruments are rather scarce in the Colombian market, the criteria are limited to size, connectedness and substitutability, as originally suggested by IMF et al. (2009). However, the proposed aggregation method is able to consider these two (or other) criteria. 2 There is an alternative to indicator-based approaches as the one proposed here: a model-based approach, which uses quantitative models to estimate financial institutions' contributions to systemic risk. However, as highlighted by Basel Committee on Banking Supervision (2013: 5): 'models for measuring systemic importance of [financial institutions] are at a very early stage of development and concerns remain about the robustness of the results; [for instance, the] models may not capture all the ways that a [financial institution] is systemically important (both quantitative and qualitative)'. 122 C. LEÓN ET AL.