As a consequence, they play a central role in the system, which can be "highly important" in the case of disturbances.
[2] Nacaskul[3] posits that a financial institution is systemically important if it is highly connected (e.g. via interbank lending market/money market channel) to systemically important banks.
The recursive definition is equivalent to performing eigendecomposition of a matrix of connectivity weights and assigning systemic importance in proportion to the values of the principal eigenvector.
The "entropic" factor correction is introduced therein to correct for the possibility that performing eigendecomposition on weighted connectivity matrices may occasionally yield "degenerate" systemic importance scores (all financial institutions identical in terms of systemic importance).
Another way to measure the TCTF feature of an institution is based on the concept of feedback centrality.