Calculate the Herfindahl-Hirschman Index (HHI) for each year using deposits and comment on the level of competition

Glencoe Algebra 1, Student Edition, 9780079039897, 0079039898, 2018
18th Edition
ISBN:9780079039897
Author:Carter
Publisher:Carter
Chapter10: Statistics
Section10.5: Comparing Sets Of Data
Problem 13PPS
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Year.      Bank.            Deposits
2018      STANBIC.      6,205,018 
2019.       Stanbic.        9,295,682
2020         STanbic.        12,742,132

2018.       BARCLAYS.    7,657,089

2019           Absa.          10,139,424

2020          Absa.       10,598,067

 

Calculate the Herfindahl-Hirschman Index (HHI) for each year using deposits and comment on the level of competition

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Follow-up Question

When the HHI is less than 1500, the market price is a competitive one, while, when the HHI is ranging from 1500 to 2500, the market is slightly concentrated. When the value is above 2500, the market is extremely concentrated. Here, for all the 3 years the HHI is above 2500, implying that the market is highly concentrated one.

Question

Are your conclusions for HHI consistent with the five-firm 
concentration in all cases? Give two reasons to support your answer.

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Year
A
B
Bank
2018 STANBIC
BARCLAYS
Total
2019 STANBIC
ABSA
Absa
Total
2020 STANBIC
ABSA
Absa
Total
C
D
Loan Advance Weightage Weightage Squared
2584735 0.446444949
0.199313093
3204859 0.553555051
0.306423194
5789594
0.505736287
5057.362869
ННІ
3946591 0.479048993
4082295 0.49552115
209501 0.025429857
8238387
ННІ
4373529 0.480643393
244620 0.026883322
4481173 0.492473285
9099322
E
ННІ
0.229487938
0.24554121
0.000646678
0.475675826
4756.758258
0.231018071
0.000722713
0.242529937
0.474270721
4742.70721
Transcribed Image Text:123 4 5 6 7 89mmppu 15 16 10 11 12 13 14 17 18 19 20 21 22 22 Year A B Bank 2018 STANBIC BARCLAYS Total 2019 STANBIC ABSA Absa Total 2020 STANBIC ABSA Absa Total C D Loan Advance Weightage Weightage Squared 2584735 0.446444949 0.199313093 3204859 0.553555051 0.306423194 5789594 0.505736287 5057.362869 ННІ 3946591 0.479048993 4082295 0.49552115 209501 0.025429857 8238387 ННІ 4373529 0.480643393 244620 0.026883322 4481173 0.492473285 9099322 E ННІ 0.229487938 0.24554121 0.000646678 0.475675826 4756.758258 0.231018071 0.000722713 0.242529937 0.474270721 4742.70721
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