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

question 3

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 these.
• 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.

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Definitions:

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Interaction

The process by which various factors or entities act upon or with each other to produce a response or change.

Gene Replication

The process by which a cell duplicates its DNA, allowing for genetic information to be passed from one generation to the next.

Molecular Mechanisms

The specific interactions and processes occurring at a molecular level that result in biological functions and behaviors.