Macroeconomic Concentration Index of Corporate Sector Companies
Macroeconomic Concentration Index of Corporate Sector Companies

Author(s): Mikhalil Pamazanov, Nadezhda Loginova
Subject(s): Social Sciences, Economy, Business Economy / Management, Socio-Economic Research
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Concentration; Herfindahl–Hirschman index; Sustainable development; Corporation; National scale
Summary/Abstract: The high concentration of assets and revenues of corporations or large enterprises on a national scale represents a risk that can hinder sustainable development. For instance, in terms of a bank’s loan portfolio concentration risk is so crucial that it is a separate significant type of risk in addition to credit risk. In the proposed article a corporate sector concentration index was constructed for countries for which revenue data of TOP-50 or TOP-100 largest enterprises is accessible from open sources. The index is based on the revealed pattern of decrease in the volume indicator of the company (revenue, assets) of the order of 1⁄n^z, where n is the serial number of the companies ranked in descending order of the indicator, and z is a country-specific parameter. Based on all possibly available open statistics, providing data on 30 countries, the consistency of the statistical hypothesis about the dependence of the corporate sector concentration index on the Human Development Index and Ease of doing business is substantiated.

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