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

Question

Quizplus · Accepted Answer

All of the options are valid criticisms of using the Herfindahl-Hirschman Index to measure bank concentration. As banking becomes more complex and less clearly defined, determining the appropriate scope of the market and separating financial markets into distinct categories becomes increasingly difficult. Additionally, the HHI index was originally designed for non-financial competition, so it may not fully capture the unique aspects of the banking industry.

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