Concentration of industries

The specialization of an economic area – for example, the city of Frankfurt am Main – in a particular industry – in this case, financial services providers: Financial services providers. Concentration is usually measured with the help of the Gini coefficient, which then reflects the share of employees in the corresponding industry within the economic area under consideration in relation to the people employed in this industry in the country as a whole – in the example: Germany. In the case of the financial sector, this is often referred to as a financial center, such as Frankfurt, Zurich or Hong Kong, if the sector is highly concentrated. – The degree of integration in a sector of the economy, and thus regularly also special conditions with regard to competition and prices. The degree of interconnectedness is monitored and published by central banks because credit risk is closely related to concentration. Difficulties arise in this respect when it comes to classification. An industry classification is ideal if the asset correlation within an industry is as high as possible and as low as possible between the different industries. – See asset correlation, Herfindahl-Hirschman index, concentration risk. – Cf. Deutsche Bundesbank Monthly Report, June 2006, p. 47 f. (cross-country portfolio diversification does not necessarily lead to sector diversification; see also references).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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