Answered: Bank Name Sales (in millions) MegaBank…

Bank Name Sales (in millions) MegaBank $1,100 City Bank 950 Nationwide Bank 845 Atlantic Savings 785 Bulk Bank 665 Metropolitan Bank 480 American Bank 310 Hometown Bank 260 Urban Bank 140

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter15: The Federal Reserve System And Monetary Policy

Section: Chapter Questions

Problem 5AA

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Question

Nationwide Bank has approached Hometown Bank with a proposal to merge. The following table lists the sales of the banks in the area. Use this information to calculate the four-firm concentration ratio and the Herfindahl-Hirschman index. Based on the FTC and DOJ Horizontal Merger Guidelines, do you think the Justice Department is likely to challenge the proposed merger?

Bank Name
Sales (in millions)
MegaBank
$1,100
City Bank
950
Nationwide Bank
845
Atlantic Savings
785
Bulk Bank
665
Metropolitan Bank
480
American Bank
310
Hometown Bank
260
Urban Bank
140

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