What is the S&P banking index?  How is it computed and what does it tell us?

Example sentence from WSJ:  "Financial stocks, particularly very
sensitive to interest rates, saw the most pronounced selling, with the
S&P banking index off 2.4 per cent for the week."

A stock index that measures buying and selling of stock and bond
companies themselves?

Hope this answers your question:	

S&P Banking Index -- The S&P Banks Index is a capitalization-weighted
index of domestic equities traded on the New York Stock Exchange and
NASDAQ. The stocks in the Index are high-capitalization stocks
representing a sector of the S&P 500. The component stocks are
weighted according to the total market value of their outstanding
shares. The impact of a component's price change is proportional to
the issue's total market value, which is the share price times the
number of shares outstanding. These are summed for all stocks and
divided by a predetermined base value. The base value is adjusted to
reflect changes in capitalization resulting from mergers,
acquisitions, stock rights, substitutions, etc

Source: http://www.cybertrader.com/TradingMarkets/Futures/Indices.aspx

A list of components can be found at the follwing link:

http://www.marketwatch.com/tools/marketsummary/indices/indices.asp?siteid=mktw&indexid=141&groupid=38&symb=BIX