Multivariate Regression Model – II

To identify Significant Influencers of Loan repayment efficiency (LE)

Results of Multivariate Regression Model – II

Goodness of Fit of the Regression Model

Observations 148.000
Sum of weights 148.000
DF 120.000
R² 0.945
Adjusted R² 0.933
MSE 16.025
RMSE 4.003
MAPE 2.999
DW
Cp 28.000
AIC 435.538
SBC 519.460
PC 0.080

Interpretation

 Given the R²= 93% of the variability of the dependent variable Loan Repayment Efficiency is explained
by the 25 explanatory variables.
 The Strength of Correlation between the Dependent Variable LE and the 25 Explanatory Variables is
Very Strong.
 R²= 93% deems an Excellent fit of the Regression Model means Very strong Correlation
between the Data observed and the Regression Model

ANOVA of Regression Model

Source DF Sum of squares Mean squares F p-Value
Model 27 33256.392 1231.718 76.861 < 0.0001
Error 120 1923.034 16.025
Corrected Total 147 35179.426      

Interpretation
Given the p-value of the F statistic computed in the ANOVA table, and given the significance level of 5%, the
information brought by the explanatory variables is significantly better than what a basic mean would bring.

Type III Sum of Squares Analysis

Source D Sum of Mean F p-Value
 F squares squares
Monthly Income 1 0.049 0.049 0.003 <0.0001
Sources of Income 1 39.630 39.630 2.473 <0.0001
Personal Capital 1 0.117 0.117 0.007 0.932
Total Business Debt 1 74.450 74.450 4.646 0.033
Personal Debt 1 0.092 0.092 0.006 <0.0001
Reason to start the trade 1 1.362 1.362 0.085 0.771
Efficent Utilization of Funds 1 25.357 25.357 1.582 0.0021
Growth in Revenue(y o y) 1 5.012 5.012 0.313 0.0058
Growth in Profits(y o y) 1 0.236 0.236 0.015 0.0090
Expansion in Capacity 1 8.227 8.227 0.513 0.0475
Amount Borrowed from MFI 1 36.999 36.999 2.309 0.0131
Tenure 1 0.090 0.090 0.006 0.0940
Rate of Interest 1 6.004 6.004 0.375 <0.0001
EMI 1 13.831 13.831 0.863 0.0035
Grace period 1 22.736 22.736 1.419 0.0236
Loan officer yrly contact 1 23.954 23.954 1.495 0.0224
Double Dipping 1 32.910 32.910 2.054 0.0154
Defaults 1 0.470 0.470 0.029 0.864
Delay 1 0.324 0.324 0.020 0.887
Delinquencies 1 7.904 7.904 0.493 0.0484
Amount of Training received on Trade 1 1.778 1.778 0.111 0.0074
No. of Counselling sessions attended 1 27.169 27.169 1.695 0.0020
Taxation 1 38.001 38.001 2.371 0.0126
Gender 1 39.274 39.274 2.451 0.120
Age 3 23.663 7.888 0.492 0.688

Interpretation
 Based on Type III – Sum of Squares Analysis the following variables bring significant value of
information in explaining the variability in the Dependent Variable –LE
Significant Variables

1. Monthly Income 1. Double Dipping

2. Sources of Income 2. Delinquencies
3. Total Business Debt 3. Amount of Training
4. Personal Debt 4. Counselling session
5. EU 5. Taxation
6. Expansion in Capacity
7. Amount Borrowed
8. Growth in Revenue
9. Growth in Profits
 Based on Type III –
10. Loan officer Contact
Sum of Squares
Analysis the following variables Do NOT bring significant value of information in explaining the
variability in the Dependent Variable –LE
 Variable Total Business Debt is the most influential that affects Loan Repayment Efficiency LE
In-Significant Variables
1. Personal Capital
2. Reason to Start the trade
3. Defaults
4. Delays
5. Gender
6. Age
Model Parameters
Source Value Standar t p-value
d error
Intercept 113.084 46.240 2.446 0.016
Monthly Income 9.332 0.000 0.055 <0.0001
Sources of Income 5.326 3.387 1.573 <0.0001
Personal Capital 0.000 0.000 -0.085 0.932
Total Business Debt -0.910 0.000 -2.155 0.033
Personal Debt -0.068 0.000 -0.076 <0.0001
Reason to start the trade 0.321 1.102 0.292 0.771
Efficient Utilization of Funds 0.192 0.153 1.258 0.0021
Growth in Revenue(y o y) 0.493 0.881 -0.559 0.0058
Growth in Profits(y o y) 1.117 0.964 0.121 0.0090
Expansion in Capacity 0.419 0.585 -0.717 0.0475
Amount Borrowed from MFI -3.000 0.000 -1.519 0.0131
Tenure 0.041 0.550 -0.075 0.0940
Rate of Interest -0.381 0.622 0.612 <0.0001
EMI -0.020 0.002 0.929 0.0035
Grace period 3.027 2.541 -1.191 0.0236
Loan officer yrly contact 0.531 0.434 -1.223 0.0224
Double Dipping -2.261 1.578 1.433 0.0154
Defaults -0.428 2.497 -0.171 0.864
Delay -0.182 1.282 -0.142 0.887
Delinquencies -1.411 2.010 0.702 0.0484
Amount of Training received on Trade 0.043 0.130 0.333 0.0074
No. of Counselling sessions attended 0.591 0.454 1.302 0.0020
Taxation -1.117 0.725 -1.540 0.0126
Gender-0 -1.154 0.737 -1.565 0.120
Gender-1 0.000 0.000 0.688
Age-1 -0.759 3.228 -0.235 0.814
Age-2 2.144 3.013 0.711 0.478
Age-3 1.760 2.321 0.758 0.450
Age-4 0.000 0.000    

Regression Equation for LE

LE = 113.084
+9.332* Monthly Income
+5.326*Sources of Income
+0.000*Personal Capital
-0.910* Total Business Debt
-0.068* Personal Debt
-0.321* Reason to start the trade
+0.192*Efficient Utilization of Funds
+0.493* Growth in Revenue(y o y)
+1.117*Growth in Profits(y o y)
+0.419* Expansion in Capacity
-3*Amount Borrowed from MFI
+0.041*Tenure
-0.381*Rate of Interest
-0.020*EMI
+3.027* Grace period
+0.531*Loan officer yrly contact
-2.261*Double Dipping
-0.428*Defaults
-0.182*Delay
-1.411*Delinquencies
+0.043*Amount of Training received on Trade
0.591*No. of Counselling sessions attended
-1.117*Taxation
+Factor*Gender + Factor*Age

Variables with +Ve influence on LE Variables with –Ve influence on LE

Intercept Total Business Debt
Monthly Income Personal Debt
Sources of Income Amount Borrowed from MFI
Personal Capital Rate of Interest
Reason to start the trade EMI
Efficient Utilization of Funds Double Dipping
Growth in Revenue(y o y) Defaults
Growth in Profits(y o y) Delay
Expansion in Capacity Delinquencies
Tenure Taxation
Grace period
Loan officer yrly contact
Amount of Training received on Trade
No. of Counselling sessions attended