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

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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 DEPOSITS 201 TABLE 123 RATIOS OF NET EARNINGS TO EARNING Assets, ALL MEMBER BANKS IN FEDERAL RESERVE DISTRICT 1, CLASSIFIED BY RATIOS OF TiME T0 GRrOSs (TotaL) DEPOSITS, 1923-1925¥ RATIOS: Time Deposits to 3ross (Total) Deposits Np LE “od "ATIOS: hat ane ta 102% Number RATIOS: Net “arnings to ming Aceats Total . No Time Dep 25 and less. . 26—50..... SI=75...... Over 7¢...... ‘Taken from the 1923, 1924, and 1925 reports on “Operating Costs and Profits, based on the Exper- iences of all Member Banks in Federal Reserve District L” prepared by Frederic H. Curtiss. Chair- man and Federal Reserve Agent, Federal Reserve Bank of Boston. ratios of time deposits to gross (total) deposits and ratios of net earnings to loans and investments (earning assets). Our findings are of the same type! for the member banks in the entire Sys- tem for the years 1919 to 1925—“bank” being used in the sense given above. His data for 1923, 1924, and 1925 are given in Table 123. In explaining the reasons for net earnings, in terms of earning assets, declining with increasing time deposits relative to gross (total) deposits, Mr. Curtiss says: “ . . . . net earnings de- cline as the proportion of time deposits rise on account of the greater cost of handling savings deposits in banks equipped to do a commercial banking business. Chief among these heavy expenses is interest paid on deposits.’ Such charges are neg- ligible in banks doing exclusively a commercial business, but con- sume two-thirds of all current expenses in banks handling pri- marily savings accounts. The clerical cost of an organization intended to handle commercial deposits is so heavy that, when added to the interest costs incidental to handling savings deposits, 14 Similar relations for 1923 and 1924 are shown by member banks in the Second District. These are presented in Circular No. 674 of the Federal Reserve Bank of New York, May 29, 1925. 15 See Table 121, page 108, in which it is shown for the country as a whole, and in keeping with the form of analysis already presented, that, relative to the several district levels, when time deposits as percentages of total deposits are high, interest on deposits in relation to earning assets is also high. Contrariwise, when time de- posits are low, interest on deposits is low. Moreover, percentage variations from ‘ype in the two series are positively correlated

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