Banking standards under the federal reserve system

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Monograph

Identifikator:: 1762969653

URN:: urn:nbn:de:zbw-retromon-142432

Document type:: Monograph

Title:: Banking standards under the federal reserve system

Place of publication:: Chicago

Publisher:: A. W. Shaw Company

Year of publication:: 1928

Scope:: xxxviii, 420 Seiten

Digitisation:: 2021

Collection:: Economics Books

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Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part III. Correlated series for all Member Banks by districts

Collection:: Economics Books

SERIES CORRELATED WITH EXPENSES 247 ment should not be interpreted as meaning that such relations hold in every district-year; the association discovered is that found generally, or as a rule, to prevail. Neither should it be understood that there is necessarily a direct causal connection between these items of expense. Both items being positively correlated with :ime deposits, are positively correlated with each other.5 Table 145 also shows the type and net amount of deviation of ratios of interest and discounts on borrowed money, calculated from the respective district averages, for each variable amount of deviation in ratios of interest on deposits taken from their district averages. By direction of deviation, the two series are negatively correlated; by amounts of deviation, correlation is moderately positive. That is, whenever and wherever high or low ratios of interest payments on deposits occur, ratios of interest and dis- counts on borrowed money tend to be low or high, respectively. Moreover, in all groups except two, the greater the deviation from type of ratios of interest on deposits, the greater the deviation of ratios of interest and discounts on borrowed money. The inverse relation by direction of deviation may be explained as follows: Ratios of interest on deposits to earning assets are positively correlated with those of time deposits to total deposits; and time deposits ratios are positively correlated with ratios of in- vestments to earning assets. Relatively large investments, as per- centages of earning assets, indicate that banks have funds adequate for the accommodation of their customers, thus reducing the necessity of borrowing from each other and of rediscounting with the Federal Reserve banks. Hence the inverse relation between ratios of interest and discounts on borrowed money and those of interest on deposits. The direct and the inverse correla- lion, respectively, between interest on deposits and salaries and wages and between interest on deposits and interest and discounts on borrowed money are shown by the distribution of the fre- quencies in Table 146. (3) Interest and Discounts on Borrowed Money In the discussion of the items of expense which, according to district deviations, are correlated with salaries and wages, it was found that the relations obtaining between interest and discounts 5 See the discussion of this point, pages 201-202.

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