Measuring Corporate Diversity in Financial Services: A Diversity Index

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Main author: Michie, Jonathan
Other authors: Oughton, Christine
Format: Journal Article           
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id eprints-37518
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
topic HD28 Management. Industrial Management
HG Finance
description 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.
format Journal Article
author Michie, Jonathan
author_facet Michie, Jonathan
Oughton, Christine
authorStr Michie, Jonathan
author_letter Michie, Jonathan
author2 Oughton, Christine
author2Str Oughton, Christine
title Measuring Corporate Diversity in Financial Services: A Diversity Index
publisher Taylor and Francis
publishDate 2022
url https://eprints.soas.ac.uk/37518/

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