Estimation of Three Indexes of Economic Concentration: An Application to Banking Sector in Nicaragua

Abstract

This article presents three indicators to estimate the degree of economic concentration in the banking sector in Nicaragua. Using annual data for the period 2007 to 2015 of the Central Bank of Nicaragua. The calculated indicators are the Herfindahl-Hirschman Index (in later HHI), warhead index (in later OJV) and dominance index (hereinafter ID). These indices are calculated for assets, credits and total deposits of private national banks, so they will have three values for each index of concentration: one in relation to the accounts of assets, loans and finally deposits. It is concluded that the banking sector in Nicaragua is highly concentrated, accounts for assets, deposits and credits. The IHH, OJV indices and ID, presented a growing trajectory in the future at the level of concentration of this industry in Nicaragua.