LESS0N 1

1. Variables of the Study:

 Distribution of the Annual Net Income

a. Quantitative

b. Continuous

c. Ratio Scale

 Banks operating in Africa engage in earnings management

a. Qualitative

b. Nominal

 Annual Loan Loss Allowance (LLP)

a. Quantitative

b. Continuous

c. Ratio Scale

Participants of the Study:

 330 banks in the African countries

2. Based on the reading, how is statistics important to business/accounting?

Businesses nowadays are becoming more and more complicated, one of the reasons why is because its
accounting changes from papers to computers. In an age of immense data, statistical analysis is
becoming an increasingly powerful tool for accountants because it will help them improve their
efficiency and help their clients make better decisions.

Based on the article, the statistics was being used as a tool to collect or form a sample out of the
population-the sample includes all commercial banks, cooperative banks, development banks, saving
banks, real estate and mortgage banks for which annual data are available during the periods 2002-
2009, where there are 330 banks across the 29 African countries gather data, specifically uses Micro-
bank-level and macro-country-level data, measuring and analyzing the data and lastly provide
conclusions and policy implementation from the result in the prior process.

Furthermore, because of the statistics, banks are able to acquire well-organized data and effective
methodology on how to manage their position and performance capabilities, one of the banks planned a
revenue diversification strategy measured by constructing the Herfindahl-Hirschman Index where it
measures diversification between major activities: net income (NET) and non-interest income (NON).
Banks also used funding modes identified in the samples as bank funding strategies and allow banks to
maintain relatively high profits.
This study focuses on the African banking sector where Micro-bank-level and Macro-country level data
are used. Using statistics in this kind of study have a great impact beyond African countries because the
benefits and the subsequent impact of research on emerging economies like Africa on economic growth
cannot be merely measured in absolute dollar terms, but in number of people that are elevated from a
desperate subsistence level to a more adequate standard living. Another is, statistical methods can help
them in knowing the feedback of the customers regarding the quality of the product which may help in
the improvement of the product.