The Use of the Herfindahl-Hirschman Index (HHI) to Measure Bank

question 104

Multiple Choice

The use of the Herfindahl-Hirschman Index (HHI) to measure bank concentration has been criticized because

• A)ascertaining whether the relevant geographic scope of the market should be regional, national, or city is becoming increasingly difficult to determine.
• B)the index was originally designed for nonfinancial competition.
• C)separating financial markets into banks, thrifts, and insurance companies is becoming increasingly difficult to justify.
• D)All of the options.
• E)ascertaining whether the relevant geographic scope of the market should be regional, national, or city is becoming increasingly difficult to determine and separating financial markets into banks, thrifts, and insurance companies is becoming increasingly difficult to justify.