In: Statistics and Probability
The commercial banking industry is undergoing rapid changes due to advances in technology and competitive pressures in the financial services sector. The data file BANKS contains selected information tabulated by Fortune concerning the revenues, profitability, and number of employees for the 51 largest US Commercial Banks in terms of revenues. Use the information in this file to complete the following:
a. Compute the mean, median and standard deviation for the three variables: revenues, profits and number of employees.
b. Convert the data for each variable to z value. Consider Mellon Bank Corporation headquarters in Pittsburgh. How does it compare to the average bank in the study on the three variables? Discuss.
c. As you can see by examining the data and by looking at statistics computed in part (a), not all banks had the same revenue, same profit or the same number of employees. Which variable had the greatest relative variation among the banks in the study?
d. Calculate a new variable: profits per employee. Develop a frequency distribution and histogram for this new variable. Also compute the mean, median and standard deviation for the new variable. Write a short report that describes the profits per employee for the banks.
e. Referring to part (d), how many banks had a profit-per-employee ratio that exceeded 2 standard deviations from the mean?
Name | Revenues | Profits | Employees |
CITICORP | 34697 | 3591 | 93700 |
CHASE MANHATTAN CORP. | 30381 | 3708 | 69033 |
BANKAMERICA CORP. | 23585 | 3210 | 77000 |
NATIONSBANK CORP. | 21734 | 3077 | 80360 |
J.P.MORGAN & CO. | 17701 | 1465 | 16943 |
FIRST UNION CORP. | 14329 | 1896 | 43933 |
BANC ONE CORP. | 13219 | 1306 | 56600 |
BANKERS TRUST N.Y. CORP. | 12176 | 866 | 18286 |
FIRST CHICAGO NBD CORP. | 10098 | 1525 | 33962 |
NORWEST CORP. | 9660 | 1351 | 55729 |
WELLS FARGO & CO. | 9608 | 1155 | 33100 |
FLEET FINANCIAL GROUP | 8095 | 1303 | 32317 |
U.S. BANCORP | 6909 | 839 | 25858 |
PNC BANK | 6859 | 1052 | 24814 |
BANKBOSTON CORP. | 6727 | 879 | 21500 |
KEYCORP | 6568 | 919 | 24595 |
BANK OF NEW YORK CO. | 5697 | 1104 | 16494 |
WACHOVIA CORP. | 5270 | 593 | 21652 |
NATIONAL CITY CORP. | 5152 | 807 | 29841 |
MELLON BANK CORP. | 5134 | 771 | 27500 |
SUNTRUST BANKS | 4585 | 667 | 21227 |
MBNA | 4524 | 623 | 17398 |
CORESTATES FINAN. CORP. | 4379 | 813 | 18847 |
BARNETT BANKS | 4102 | 255 | 21487 |
REPUBLIC NEW YORK CORP. | 3738 | 449 | 5900 |
STATE ST. CORP. | 3428 | 380 | 14199 |
COMERICA | 3175 | 530 | 11000 |
BB&T CORP. | 2598 | 360 | 9803 |
SOUTHTRUST CORP. | 2503 | 307 | 10311 |
SUMMIT BANCORP | 2367 | 371 | 8566 |
HUNTINGTON BANCSHARES | 2324 | 293 | 9485 |
NORTHERN TRUST CORP. | 2267 | 309 | 7553 |
MERCANTILE BANCORP. | 2257 | 205 | 9510 |
FIRST OF AMER. BANK CORP. | 2078 | 315 | 10622 |
CRESTAR FINANCIAL CORP. | 1997 | 310 | 8215 |
FIFTH THIRD BANCORP | 1924 | 401 | 6787 |
REGIONS FINANCIAL | 1912 | 300 | 9227 |
FIRSTAR CORP. | 1893 | 295 | 7755 |
UNION PLANTERS CORP. | 1778 | 209 | 7711 |
MARSHALL & ILSLEY CORP. | 1743 | 245 | 10227 |
POPULAR | 1739 | 210 | 8854 |
AMSOUTH BANCORP. | 1644 | 226 | 6400 |
FIRST TENN. NATL. CORP. | 1609 | 197 | 8207 |
FIRST SECURITY CORP. | 1503 | 206 | 7673 |
OLD KENT FINANCIAL CORP. | 1306 | 180 | 6328 |
FIRST EMPIRE STATE CORP. | 1258 | 176 | 4781 |
PACIFIC CENTURY FINANCIAL | 1250 | 139 | 5114 |
PROVIDIAN FINANCIAL | 1217 | 191 | 3884 |
SYNOVUS FINANCIAL CORP. | 1215 | 165 | 7496 |
COMPASS BANCSHARES | 1131 | 156 | 5060 |
FIRST NATL. OF NEBRASKA | 1047 | 75 | 5200 |
ans::
as for given data
A) We will use excel to solve the data with all formulas provided.
sum all the value of revenue and divide 51 to find mean of revenue. similarly do for Profit and Employees.
Revenues | Profits | Employees | |
Mean | 6355 | 803 | 21530 |
For Median make revenue in ascending order and take the 26th value (51/2 = 25.5=26 which is the middle value). Similarlly proceed for profit and employee.
Revenues | Profits | Employees | |
Median | 3428 | 401 | 11000 |
for Standard deviation use the following formula
Revenues | Profits | Employees | |
Std | 7458 | 882 | 21269 |
B)
We take the population mean as
Revenues | Profits | Employees | |
MELLON BANK CORP. | 5134 | 771 | 27500 |
Revenues | Profits | Employees | |
Stdev | 7458 | 882 | 21269 |
n | 51 | 51 | 51 |
Square root(n) | 7.14 | 7.14 | 7.14 |
Stderr | 1044.28 | 123.48 | 2978.31 |
Revenues | Profits | Employees | |
Mean(Xbar) | 6355 | 803 | 21530 |
Revenues | Profits | Employees | |
MELLON BANK CORP.(mu) | 5134 | 771 | 27500 |
Revenues | Profits | Employees | |
Zvalue | 1.17 | 0.26 | -2.00 |
I have compared the average of all banks revenue, profit and employees with that of melon bank and got the zvalue using z test. There was no level of significance so based on the the level of sig we can compare. if I take .05 level of sig we get zcritical value as +or-1.96 for 2 tail. hence we can say that comparing the zvalue and zcritical we say there is a difference between employee of melon and the average of rest since -2<-1.96.
C)
CHASE MANHATTAN CORP. had the highest revenue and profit among the othe companies in the given data.
The difference between the revenue and average revenues of the data set is 26953.
The highest number of employee was found in NATIONSBANK CORP..
D)
Range | Frequency | Cumulative Freq | |
0 | 0.01 | 0 | 0 |
0.01 | 0.02 | 2 | 2 |
0.02 | 0.03 | 17 | 19 |
0.03 | 0.04 | 15 | 34 |
0.04 | 0.05 | 12 | 46 |
0.05 | 0.06 | 2 | 48 |
0.06 | 0.07 | 1 | 49 |
0.07 | 0.08 | 1 | 50 |
0.08 | 0.09 | 1 | 51 |
Mean | Median | Stdev |
0.04 | 0.04 | 0.01 |
E)
Mean+2*stdev
0.037+2*0.014 = 0.064
Values with P/E ratio above 0.064
Name | Revenues | Profits | Employees | P/E | >2stdev |
J.P.MORGAN & CO. | 17701 | 1465 | 16943 | 0.086466 | Yes |
BANK OF NEW YORK CO. | 5697 | 1104 | 16494 | 0.066933 | Yes |
REPUBLIC NEW YORK CORP. | 3738 | 449 | 5900 | 0.076102 |
Yes |
note:: part in b: " How does it compare to the average bank in the study on the three variables? Discuss", as I don't know how to compare it.
sol: I have compared the average of all banks revenue, profit and employees with that of melon bank and get the zvalue using z test. Based on the the level of sig we can compare. if I take .05 level of sig we get zcritical value as +or-1.96 for 2 tail. hence we can say that comparing the zvalue and zcritical we say there is a difference between employee of melon and the average of rest since -2