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 379 the influence of gross earnings on net earnings is greater than that given by (7), which expresses the most probable effect for all the banks. Similarly, the negative mean v of Group 4, — 1.0 + 0.3, indicates that the influence of gross earnings on net earnings in that group is smaller than that given by (7), if the influence of total expense is assumed everywhere to be the same. Thus far in this analysis, an approximate measure of the rela- tive influence of gross earnings and of total expense on net earn- ings is secured. It has also been shown that the probability is great that either one or the other of the following propositions is true: (1) if the law of variation of net earnings with gross earnings is the same for banks in all groups, then the probability is about 1,000 to 7 that the law of variation of net earnings with total expense is different for banks in the different groups; (2) if the law of variation of net earnings with total expense is the same for banks in all groups, then the probability is also large that the law of variation of net earnings with gross earnings is different for banks in the different groups. One method of proving which of the two above propositions is the more true is to treat each of the four groups separately, in a manner similar to that followed for the entire 408 banks. This has been done. The constants K,, K,, E’;, and E’, in the general equations (1) and (2), for each of the groups, together with the probable errors, are shown in Table IV. The outstanding facts in this table are, first, that the law of variation of net earnings with gross earnings is practically the same in all groups; that is, the constant E, = 4 0.77 + 0.04, ap- proximately, and is the same as that given by equation (7) based upon all banks. Second, the law of variation of net earnings with total expense varies widely from group to group; that is, the constant E,” has a minimum numerical value of 0.33 in Group 4 and a maximum numerical value of 0.62 in Group 3. The differ- ence between these two values is nearly 3 times their probable errors, significant indication that total expense influences net earnings more in banks in which it is low—it is these which tend to increase—than in banks in which it is high—it is these which tend to decrease. Moreover, the difference between any two group values of E. (with the possible exception of those for 3 The difference is about eleven times the probable error of E from Solution IL viz., * 0.026.

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