Question

Find a study/article (related to business) in the news that uses the normal distribution to explain a phenomenon. Summarize the study and discuss how the study uses/apply the normal distribution. Makes sure to provide the link to the study/article.

Answer 1

Article which follows normal distribution:- Systemic risks in banking :- 'normaly' safe, compliant, and very risky RBI governor shakitant das, at a recent event made several astute and insightful observations about the covid 19 crises and it's impact on the indian banking. Governor das highlighted the fact that "once in a lifetime" Economic events are becoming "once in a decade" Events.for sestematic stress testing Indian gdp growth is assume to have a normal distribution with a long term average of growth of around 6% and a standard deviation (sigma) of 2% . As per this 'normal' fairytail, 0% growth in any year is a three sigma event. It's is an event as well as 1-in-1000 . The current consensus estimate of real gdp change for FY-21 is a contraction of round 5.0-6.0 % which is a six sigma event. As per the normal distribution such a negative growth rate is ever rarer than 1-in-a million . Under assumptions of normality these are stark outliar events and no one can be blaimed for lapses in oversight or risk governance. Continuing with normal distribution assumptions will cause the regulatir as well as the banks to underestimate the impact of the shock. The normal distribution is the most important probability distribution in stastics because it fits many natural phenomenona. Hence the normal distribution is useful in falls and rise of GDP it gives the graphical representation of the economy of our country.