Banking standards under the federal reserve system

Bibliographic data

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

Usage license:: Get license information via the feedback formular.

Chapter

Document type:: Monograph

Structure type:: Chapter

Title:: Part IV. Norms, trends, and correlations of series in the Boston and in the New York districts by Member Banks

Collection:: Economics Books

320 BANKING STANDARDS which increased, and those which were relatively high which de- creased between 1924 and 1925. Moreover, the lower they were, the more they rose; and the higher they were, the more they fell. It should be observed that these latter results are obtained by the simple process of (1) classifying the banks into groups ac- cording to their net earnings ratios in 1924, (2) calculating the average ratio for each class in that year, and (3) comparing this amount with the average for the same banks in 1925. This proc- ess is direct. It does not involve the use of averages as standards of reference to determine positions, nor does it identify changes from year to year with differences in relative dispersion. And yet the results secured by both methods of study indicate changes according to a well-defined pattern—a pattern encountered in the discussion of gross earnings ratios in the Boston district for 1924 and 1925, and of total expense ratios in the Boston and New York districts for the years 1922 to 1925 and 1923 to 1925, respectively. In the discussion of gross earnings and of total expense ratios for individual banks, confidence is expressed in the belief that results secured by the types of analyses just presented are sig- nificant. It is maintained that they seem to indicate that forces are operating to establish equilibria with respect to these ratios. It is also believed that forces are similarly tending to bring ratios of net earnings to an equilibrium. What is the evidence which appears to support this conclusion? In Chapter VII it was found, first, that from year to year, during the years 1919 to 1925, district ratios of net earnings to earning assets which were low tended to increase, and those which were high tended to decrease.” Similar tendencies between 1924 and 1925 are now found for the net earnings ratios of individual banks in the Boston district.® Second, the net rates of increase or of decrease from year to year, during the period 1919 to 1925 for district ratios, varied directly with the percentage amounts of deviation from type—type being the seven-year average ratios for the respective districts.? It is now found that similar condi- tions obtain for the Boston district member banks for the years 7 See Table 84. 8 See Tables 187 and 188. 2 Gee Table 853.

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