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.

APPENDIX I 3717 the influence of gross earnings on net earnings is substantially the same for banks in any group, the conclusion is unavoidable that the influence of total expense on net earnings is significantly different for banks in the different groups. This fact is shown particularly in the mean v’s. Note that the mean v’s for Groups 1 and 2 are opposite in sign and 4 times their own probable errors (+ 1.2 =0.3 and — 1.1 += 0.3). The mean v is the algebraic sum of the 4+ and — v’s divided by the total number of v’s or banks; for example, for Group 1 it is (324-173) = 129= + 1.2. The probable error of the mean v for each group is com- puted from the relation r, ===, where r, = the probable error of the mean v, r = the probable error of a single observation of Solution /,, + 3.5, and # the number of banks in the group. The mean 2’s for Groups 3 and 4 are also opposite in sign, and four times their own probable errors. According to the laws of prob- ability, there are only about 7 chances in 1,000 that these mean v’s, four times their own probable errors, are entirely fictitious. This is the most significant evidence pointing to a different effect of total expense on net earnings for banks in the several groups. The interpretation of the signs of the mean residuals is as fol- lows: Referring to equation (1), in which are substituted the specific constants (5) from Solution I,, it is evident that if the observed decrease in net earnings, —AN, is larger than the com- puted increase, + 1.08 — 0.497 AT, the residual is 4, and vice versa. Hence, in Solution 7,, the observed decrease in net earn- ings was larger in Groups 1 and 3 than the increase computed from (6). In Groups 2 and 4, the observed decrease in net earn- ings was smaller than the computed increase. Bearing in mind the assumption of uniform influence of gross earnings on net earnings in all groups, this fact is to be interpreted as follows: in Groups 1 and 3, the influence of total expense on net earnings is probably larger, and in Groups 2 and 4, smaller, than that represented by (6), based upon all 408 banks. If it is now assumed that the influence of total expense on net earnings is the same in all groups, and if the preceding processes for the 408 banks, using equation (2) instead of (1), are repeated, there is obtained, for the equation of the regres- sion line of annual change in net earnings on annual change in gross earnings,

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