180
BANKING STANDARDS
gross earnings, total expense, and net earnings. What is said
here, as in other places respecting the correlation of related
series, is not necessarily intended to imply a causal order between
the series discussed. Such a relation may obtain, but more than
statistical devices are required to determine it.
TABLE 110
CORRELATION OF DEVIATIONS OF RATIOS IN PAIRED SERIES
(Percentage Deviations from the Country’s Yearly Averages)
INDEPENDENT VARIABLE—Ratios of
Demand Deposits to Earning Assets
Position -
Distance from Average
Percentage I Average
Groups . Percenti
1 AECL
+12 36
Total. ..............
Above
20 and over............
IOI0 20... 00ias sarnsnn
Underzo..............
ol 42
QA
Below
Underzo..............
oto20................
2oand over. ...........
Total. ouisunisans sna =IZ
Number
of
District-Years
~n
»
DEPENDENT VARIABLES—Net
Average Percentage
Gross
Earnings
~ Earning
Aggets
Total
Expense
to Earning
Assets
Net
Earnings
to Earning
Assets
+ 2.85
”
~ ag
- 10
t.no
= ar
1 26
+ .80
- 36
~1
BN]
E
8
TT
Based upon the various types of summaries given above in
tabular and in generalized form, it appears, therefore, that (1)
demand deposits and gross earnings, and demand deposits and
total expense, each being expressed as ratios of earning assets,
are negatively correlated when measurements are made in terms
of their respective positions relative to district levels and according
to their directions of change from year to year, but that
they are positively correlated in both respects according to net
percentage amounts of deviation and of change; (2) net earnings
are high when demand deposits relative to the country and to
the district levels are high, and they decrease from year to year
when ratios of demand deposits increase; (3) districts having
demand deposits above and loans and discounts below their own
levels have the lowest gross earnings and total expense, those
with both demand deposits and loans and discounts below these
levels have the lowest ratios of net earnings, and districts with
demand deposits below and loans and discounts above their levels
have the highest gross and net earnings and total expense; and
