SERIES CORRELATED WITH NET EARNINGS 255 
TABLE 1409 
NATURE OF CORRELATION IN PERCENTAGE DEVIATIONS AND YEAR-TO- 
YEAR CHANGES IN DIFFERENT SERIES PAIRED 
SERIES CORRELATED 
Independent Variables 
Dependent Variables 
Loans and Discounts to Earnine 
ASSIS... unurn singin 
Gross Earnings to Earning As- 
sets. |. . 
Gross Earnings to Earning As- 
sets. ........ i. 
Loans and Discounts to Earnir- 
Assets... 
Tatal Deposits to Earning As- 
BEY. . LL .iieiisihe nanan 
Gross Earnings to Earning As- 
pte 
Gross Earnings to Earning As: 
Sets. ..... ci, 
Total Deposits to Earning As- 
ets 
NATURE oF CORRELATION 
Differ- 
ences 
from 
District 
\verages 
Changes 
from 
Year 
to 
Year 
Differ- 
ences 
from , 
Country's 
Yearly 
Averages 
Positive 
Positive 
Positive 
Positive 
Positive 
Positive 
Negative Negative® 
Negative®! Nerative®! Positive® 
ow 
larger the gross earnings, the larger the net earnings. Accord- 
ingly, it is well to observe the conditions favorable or unfavorable 
to large gross earnings and, hence, also to net earnings, provided 
total expense remains constant. The fact that it does not remain 
constant may be ignored for the moment, but must, of course, 
later be taken into account. It will simplify the review of matter 
already presented if the expressions “positive correlation” and 
“negative correlation” are used, and if, as appears likely in the 
instances under review, the presence of correlation indicates a 
causal order of relations. 
The relations between variable conditions in two important 
series and those in ratios of gross earnings are summarized in 
Table 149. From this table it is apparent that, in general, when- 
ever and wherever loans and discounts as proportions of earning 
assets are relatively large or small, gross earnings in relation to 
earning assets are large or small; and whenever and wherever 
ratios of gross earnings are large or small, ratios of loans and 
discounts are large or small. That is, the series are positively 
correlated. On the other hand, the larger the ratios of total 
deposits to earning assets, the smaller the ratios of gross earnings 
to earning assets. Similarly, the larger the ratios of gross earn- 
ings to earning assets, the smaller are the total deposits? ap- 
2 There is low positive correlation for the paired ratios taken from the country’s 
vearlvy averages.