Answer to Question #221868 in Economics for BirdMan

Question

A binomial logit model is estimated to determine the ownership of a Bank Debit card in a 

selected Suburb in South Africa. The Bank Debit card is a binary variable with Y=1 for debit 

card holder and zero otherwise. The number of households is 60. The estimated binomial logit 

model is given by 𝐿𝑖 

 

 𝐿𝑖 = -0.55574 + 0.0012𝐵𝑖 - 0.1202𝑇𝑖 – 1.352𝑅𝑖 + 1.452𝐸𝑖 

 z = (−0.7316) (1.97) (−2.567) (-1.98) (2.89) 

 McFadden R2 = 0.1007, 

 LR statistics = 7.6073, 

 Prob(LR statistics) = 0.0155 

 

where 𝐵𝑖= account balance in rands 

𝑇𝑖 = frequency of ATM transactions 

𝑅𝑖 = 1 if interest is paid on the account balances and  zero otherwise. 

𝐸𝑖= 1 if employed in formal sector and zero if in the informal sector. 

 

3.1 What are your priori expectations of each determinant on the Bank Debit card?

 (2) 

 

3.2 Interpret the estimated coefficient in the model. 

Answer 1

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