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Michie, Jonathan and Oughton, Christine (2022) 'Measuring Corporate Diversity in Financial Services: A Diversity Index.' International Review of Applied Economics, 36 (3). pp. 308-337.

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Abstract

This paper provides a measure of corporate diversity in financial services. Our index is based on four components: ownership; competitiveness; balance sheet structure/resilience; and geographic spread. The first of these sub-indexes measures ownership diversity based on the Berry index of diversification and the Gini-Simpson index of biodiversity. It captures the extent of diversity in ownership types – for the UK, banks, mutuals, and the government owned National Savings & Investment – where each of these have different objectives, creating diversity in behaviour. Our second sub-index captures the extent of competition, and is based on the inverse of the Hirschmann-Herfindahl index of concentration. Our third sub-index measures diversity in balance sheet structures and resilience across the financial sector. Our final sub-index captures the extent of geographic spread and the regional concentration of financial services. These indicators are combined into a single index – the D-Index – that measures diversity in financial services. The D-Index shows a marked decline in the run-up to the 2007–2009 financial crisis, followed by further falls during 2008 and 2009. Since then, the index has remained more or less flat. We are no closer to creating the conditions – of diversity – to avoid a repeat of the 2007-2009 global financial crisis.

Item Type: Journal Article
Keywords: Financial services, corporate diversity, diversity index, financial stability
SOAS Departments & Centres: Departments and Subunits > School of Finance & Management
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
H Social Sciences > HG Finance
ISSN: 02692171
DOI (Digital Object Identifier): https://doi.org/10.1080/02692171.2022.2090522
Date Deposited: 25 Jun 2022 12:24
URI: https://eprints.soas.ac.uk/id/eprint/37518
Funders: Other

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