I read, recently, the Dr Omar Davies response to a question on why the National Commercial Bank (NCB) was not given the same treatment as Century National Bank and Eagle Merchant Bank at the commission of enquiry into the Financial Sector Adjustment Company (FINSAC).

In his response, Dr Davies is reported to have drawn on the 'too big to fail' complex, saying that if NCB went under it would have compromised the entire banking sector.

I am yet to read in any of the local media an analysis of this response.

To the best of my knowledge of the theory, there might have been merit in the approach to NCB.

There are three key criteria that are helpful in identifying the systemic importance of markets and financial institutions: size - the volume of financial services provided by the individual component of the financial system; substitutability - the extent to which other components of the system can provide the same services in the event of a failure; and interconnectedness - linkages with other components of the system.

During the financial meltdown in Jamaica more than a decade ago, I worked with NCB.

Today, I am fortunate, based on my experience in Jamaica, to travel around the world to help governments strengthen their financial systems. With that, if we were to look back at NCB using the three criteria above, we would more than likely agree that NCB was significant in terms of size and interconnectedness and, perhaps, it would be debatable with respect to the extent that any of its services were substitutable.

Dr Davies' response should not be treated lightly if a goal of the commission of enquiry is to educate and promote public awareness on financial services.

To recognise the importance of the theoretical argument surrounding the 'too big to fail syndrome' we need only look at the United States treatment of Lehman Brothers and AIG in the recent global financial meltdown.

Mark McKenzie

markymmckenzie@rogers.com