Lack of diversity damaging financial system

New research has found that declining diversity in the UK financial sector, a trend which pre-dates the global financial crisis, is damaging the resilience of financial systems and reducing competition for consumers.

The report, Measuring Diversity in Financial Services Markets: A Diversity Index, examines the savings and mortgage markets since 2000 and evaluates market diversity using four different measures: firm size, location, approach to funding and ownership structures.

The overall conclusion of the report is that diversity across savings and mortgage markets has dropped by approximately 20% since 2004.

Co-author Jonathan Michie, Professor of Innovation and Knowledge Exchange at the University of Oxford, believes this decline has implications for market security. “Growing and maintaining diversity within the financial services industry is crucial to reduce the risk of future market shocks infecting the whole financial system, as difference promotes resilience,” he said.

Read more at University of Oxford