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

question 32

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 above.
• E)Answers A and C only.

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Definitions:

Mutual Gain

A situation or outcome where all parties involved benefit or profit from the arrangement or deal.

Misunderstanding

A failure to understand correctly, leading to confusion or the incorrect interpretation of a message or situation.

Adversarial Management

A management style characterized by conflict and opposition between managers and employees rather than cooperation.

Union Representative

An elected or appointed individual who represents and advocates for the interests of union members in discussions with management.