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

244 BANKING STANDARDS assets, the higher or lower, respectively, the ratios of interest on deposits. Neither positive nor negative correlation obtains, how- ever, between the net percentage deviations of ratios of interest and discounts on borrowed money and percentage deviations of salaries and wages. Positive correlation, found to obtain between the district devia- tions of ratios of salaries and wages and of interest on deposits, should not, it is believed, be interpreted as of a causal order. The reasons for this belief are as follows: At a given time, the larger the proportion of time deposits to gross deposits, the smaller the ratios of wage and salary expense to earning assets, and the larger the ratios of interest on deposits to earning assets. The positive correlation, found in Table 144, is due to the fact that during the years 1919 to 1925 there was an upward trend in both series. The inverse correlation between ratios of salaries and wages and of ratios of interest on borrowed money is due to the fact that, for the period 1919-1925, the direction of change in the ratios of the first series was generally upward and in those of the second series generally downward. When yearly deviations in the respective series are paired, the correlation, therefore, tends to be of the negative type. It would be perfect only if a plus deviation in one series were always accompanied by a negative deviation in the other, and vice versa. (2) Interest on Deposits The average amounts of interest paid on deposits, relative to earning assets, by all member banks in each of the Federal Re- serve districts by years weré analyzed with respect to norms and trends in Chapter VI. In later chapters, the types and degrees of correlation obtaining between each of a number of banking series and interest payments in this form were given in various tabular summaries. There is no necessity of repeating what has been said relative to such correlations in each of which interest payments on deposits, in the form of ratios to earning assets, were treated as the dependent variable. Neither is it advisable, because of £ See Frederic H. Curtiss, “Operating Costs and Profits in 1925,” Federal Reserve Bank of Boston, from which this relationship may be determined for banks in the Boston district.

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