04 Jun Question Question 1 1. The data file Loanapp.dta contains in
Question
Question 1
1. The data file Loanapp.dta contains information from mortgage applications made in the Boston area in 1990, and a follow up survey of the banks and other lending institutions that received these mortgage applications. These data were originally used in a famous study by researchers at the Boston Federal Reserve Bank. This dataset is a subset of that original data. The binary variable to be explained is approve, which is equal to 1 if a mortgage loan to an individual is approved. The key explanatory variable is white, a dummy variable equal to one if the applicant was white. The other applicants in the dataset are black and Hispanic.
To test for discrimination in the mortgage loan market, a linear probability model can be used: approve=?0+?1 white + other factors.
If there is discrimination against minorities, and the appropriate factors have been controlled for, we expect ?1 to be Term 1 .
5 points
Question 2
1. Regress approve on white. Interpret the results: the probability of getting your loan approved is Blank 1 percent (round your answer to 1 decimal point) Blank 2 (higher/lower) if you are a white person rather than an African-American person or an Hispanic person.
10 points
Question 3
1. To avoid omitted variable bias, you want to keep constant financial variables such as housing expense-to-income ratio (hrat), and loan-to-ratio (loanprc), and other applicant characteristics such as gender (male) and marital status (married). Thus, as controls add the following 14 variables: hrat, obrat, loanprc, unem, male, married, dep, sch, cosign, chist, pubrec, mortlat1, mortlat2, vr. (Note: the meaning of most of the variables can be made clear if you look at their labels in the window Variables in Stata). Relative to the single regression model, the coefficient on white on this multiple regression model goes Blank 1 (up/down). Is there evidence of discrimination against minorities? Blank 2 (Yes/No)
10 points
Question 4
1. Graph the predicted probabilities of loan approval with loanprc in the x-axis, for whites and nonwhites. You should have two separate lines, one for whites and another for non-whites, with loanprc in the horizontal axis and predicted probabilities in the vertical axis. Use intervals of 0.2 for loanprc. In order to achieve that you have first to enter a margins command, specifying the values at which you want the predicted probality to be evaluated at. Keep all the dummy variables at 1 and the rest of the
Our website has a team of professional writers who can help you write any of your homework. They will write your papers from scratch. We also have a team of editors just to make sure all papers are of HIGH QUALITY & PLAGIARISM FREE. To make an Order you only need to click Ask A Question and we will direct you to our Order Page at WriteDemy. Then fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.
About Writedemy
We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.
How It Works
To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.
Are there Discounts?
All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.