336
BANKING STANDARDS
tion of total expense ratios in 1924 and of the type of change
between 1924 and 1925, increasing gross earnings ratios invariably*?
result in net increases, and decreasing gross earnings ratios
in net decreases in net earnings ratios; (2) increasing and decreasing
total expense ratios sometimes produce net increases and
sometimes net decreases in net earnings ratios; (3) when increases
occurred in gross earnings ratios and also in ratios of
total expense, net earnings ratios increased, thus indicating the
dominant influence of gross earnings; (4) when decreases occurred
in gross earnings ratios and also in total expense ratios,
net earnings ratios decreased, thus demonstrating the greater
influence of changes in gross earnings ratios in producing the
results; and (5) on the average, increasing ratios of gross earnings
and decreasing ratios of total expense increase net earnings
ratios by the same amount as they are decreased by decreasing
ratios of gross earnings and by increasing ratios of total expense.
While these are some of the general conclusions which may be
drawn from Table 196, the detail are illuminating in other respects.
Let us compare the net changes in net earnings ratios for banks
with gross earnings and with total expense ratios differently placed
with respect to the 1924 averages, and observe the relative effect
upon such changes of the regression tendencies in the two series.
Position of Ratios
in the Two Series
Both above
Both below
Regression
Tendencv
Net Change in Net
Earnings Ratios
To decrease | A fall*
To increase A rise
Dominant Factor in
Producing the Result
Gross Earnings ratios
Gross Earnings ratios
* Slight.
If the net changes in net earnings ratios are determined for
banks with both gross earnings and total expense ratios changing,
the following results are secured:
Nature of Change : Net Change in
in Both Series Net Earnings
Dominant Factor in
Producing the Result
i
Both increasing
Both decreasing
A rise
A fall
Gross Earnings ratios
Gross Earnings ratios
2 One slight exception—a decrease of .01 of a point. For explanation of this
decrease. see Case 1. Appendix I, page 386.
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