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 Assets.
 |. .

Gross Earnings to Earning Assets.
 ........ i.
Loans and Discounts to Earnir-Assets...


Tatal Deposits to Earning As-BEY.
 . LL .iieiisihe nanan
Gross Earnings to Earning Aspte


Gross Earnings to Earning As:
Sets. ..... ci,
Total Deposits to Earning Asets


NATURE oF CORRELATION

Differences

from
District
\verages

Changes
from
Year
to
Year

Differences

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. Accordingly,
 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, whenever
 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 earnings
 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.