A binomial logit model is estimated to determine the purchase of a house using a bank...

 

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A binomial logit model is estimated to determine the purchase of a house using a bank loan in a selected Suburb in South Africa. The purchase of a house using a bank loan is set up as a binary variable with Y=1 for purchasing and zero otherwise. The number of households is 100. The estimated binomial logit model is given by Li L₁ = -0.55574 +0.57lnDY + 0.112lnSA, +1.352HA; + 0,452Educ - 1.452CA, (1.97) z = (-0.7316) (2.97) (12.567) (-1.98) (-1.98) McFadden R² = 0.3507, LR statistics = 9.6073, Prob(LR statistics) = 0.027 Where In denotes logarithm DY= disposable income in Rands SA₁= Savings account balance in Rands HA = 1 if the household head's salary or benefits include a housing allowance and zero otherwise. Educ, = Number of years of education of the household head. CA= 1 if derogatory credit rating assessment and zero otherwise. (a) Interpret the estimated coefficients in the model. (b) Assuming all other factors in the model remain constant, (6) (8) A binomial logit model is estimated to determine the purchase of a house using a bank loan in a selected Suburb in South Africa. The purchase of a house using a bank loan is set up as a binary variable with Y=1 for purchasing and zero otherwise. The number of households is 100. The estimated binomial logit model is given by Li L₁ = -0.55574 +0.57lnDY + 0.112lnSA, +1.352HA; + 0,452Educ - 1.452CA, (1.97) z = (-0.7316) (2.97) (12.567) (-1.98) (-1.98) McFadden R² = 0.3507, LR statistics = 9.6073, Prob(LR statistics) = 0.027 Where In denotes logarithm DY= disposable income in Rands SA₁= Savings account balance in Rands HA = 1 if the household head's salary or benefits include a housing allowance and zero otherwise. Educ, = Number of years of education of the household head. CA= 1 if derogatory credit rating assessment and zero otherwise. (a) Interpret the estimated coefficients in the model. (b) Assuming all other factors in the model remain constant, (6) (8)

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b Assuming other factors are zero the probability that an account balance has R5000 is given as L ... View the full answer