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 . Percent- 
i 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 accord- 
ing 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