Measuring corporate diversity in financial services: a diversity index

Figures & data

Chart 1. Ownership index: banks, mutuals and NS&I.

Source: own calculations (see Section 3.3 below). The index has been set to equal 100 at the start of the period in 2000 and this is the case in all Charts below except charts 3 and 4.

Chart 2. Competitiveness index: mortgage balances outstanding and UK deposits.

Source: Own calculations using data on mortgages and deposits of banks, building societies and NS&I as described in Appendix 1.

Chart 3. Major UK banks and mutuals customer funding gap as a proportion of customer loans and advances.

Chart 4. The Hirschmann-Herfindahl index of funding model concentration; market concentration of loan to deposit ratios.

Chart 5. Resilience index.

Chart 6. Geographic spread of head offices and strategic decision making.

Source: own calculations (see Section 3.3 above).

Figure 1. The D-index and its component sub-indexes.¹⁶

Chart 7. Diversity index for UK financial services (D-index): ownership, competitiveness, resilience & geographic spread.

Source: own calculations (see Appendix 1).

Chart 8. Mortgage-deposit rates spreads: banks and building societies.

Source: Bank of England monthly data on mortgage and time deposit rates for banks and building societies.

Chart 9. Bank and building society mortgage rates.

Source: Bank of England monthly data on mortgage and time deposit rates for banks and building societies.

Chart 10. Bank and building society deposit rates.

Source: Bank of England monthly data on mortgage and time deposit rates for banks and building societies.

Table 1. Correlation matrix.

	MDS	HH	OD
MDS	1
HH	0.71**	1
OD	−0.93**	−0.63**	1

**denotes significance at the 1% level.

Table 2. Results from regressions of the bank mortgage-deposit rate spread (MDS) on the degree of competition (HH) and corporate ownership diversity (OD).

	OLS Estimators		Newey-West Robust Standard Errors
	MDS	MDS	MDS	MDS
Constant	−3.3605 (−2.84)***	−3619 (−3.08) ***	−0.3605 (−2.77) ***	−3619 (−3.16) ***
Log BSt-1	0.6834 (8.60)***	0.6832 (8.72) ***	0.6834 (8.57)***	0.6832 (8.94) ***
Log ODt-2	−0.5420 (−2.26)**	−0.5273 (−2.99) ***	−0.5420 (−3.13)***	−0.5273 (−3.29) ***
Log HHt-2	0.1977 (0.03)	–	0.1977 (0.04)	–
Time	0.0002 (0.57)	0.0002 (1.12)	0.0002 (0.67)	0.0002 (1.17)
F-Statistic	404.09	545.69	383.97	516.38
Adjusted R^2	0.9516	0.9522
Durbin Watson	1.900	1.899
Breusch-Godfrey	0.282	0.282
Engle-Granger	−8.600	−0.86
Number of Obs	82	82	82	82

** and *** denote significance at the 5% and 1% levels respectively.