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# Using checking account balance as the dependent variable and using as independent

variables the number of ATM transactions, the number of other services used, whether the
individual has a debit card, and whether interest is paid on the particular account, write a
report indicating which of the variables seem related to the account balance and how well
they explain the variation in account balances. Should all of the independent variables
proposed be used in the analysis or can some be dropped?
By using regression analysis we can now estimate or predict the account balances if we
know the number of ATM transactions, the number of other services used, whether the individual
has a debit card, and whether interest is paid on the particular account.
Y=174.9+90.47(Trans)+59.99(Services)+161.01(Debit)+218.83(Interest)
Model Summary
Model

R
.765a

R Square

Square

.585

.555

398.389
ANOVAb

Sum of
Model
1

Squares
Regression
Residual

df

Mean Square

1.229E7

3073046.498

8729246.940

55

158713.581

2.102E7

59

Total

Sig.
.000a

19.362

Coefficientsa

Model
1

Unstandardized

Standardized

Coefficients

Coefficients

Std. Error

(Constant)

174.920

167.053

Transaction

90.471

12.452

Services

59.992

Debit
Interest

Beta

Sig.

1.047

.300

-159.862

509.701

.651

7.265

.000

65.516

115.426

27.427

.199

2.187

.033

5.026

114.957

161.017

108.416

.135

1.485

.143

-56.254

378.287

218.834

119.929

.163

1.825

.073

-21.508

459.177

## The regression coefficientsprovide information about their individual relationship with

account balances. The regression coefficient for mean number of ATM transactions is 90.47.

Thecoefficient is positive and shows a direct relationship between account balance and number
of ATM transactions. If we increase the number of ATM transaction by 1 and hold other
independent variables constant, we can estimate an increase of 90.47\$ in the account balance.
The number of other services used variable also shows direct relationship between the
account balance and the number of other services used. It is logical that individuals with a higher
account balance use more services. So for each additional service used we estimate an increase
of 59.99\$ in the account balance.
The third variable is number of other services used, our regression analysis shows that
there is positive relationship between individuals who have debit card and account balances. The
data shows if the individual has a debit card then it will increase the account balance by 161.01\$.
The fourth variable is whether interest is paid on the particular account. Again our data
shows positive and direct relationship between account balance and whether interest is paid on
the particular account. So the data dhows if there interest is paid in a particular accountthen we
can estimate there will be an increase of 218.83\$ in the account balance.
However, not all the independent variables should be used because not all of them are
effective predictors of the account balance. In order to determine which independent variable to
tale out we look at the p-value, if the p-value is greater than the .05 significant levels we
conclude it is not a good predator. Looking at the table we see the variables debit card and
interest their p-value are higher than the significant level. We remove the variable debit and we
run the regression analysis again.
Coefficientsa
Unstandardized Coefficients Standardized Coefficients
Model

1 (Constant)

Std. Error

Beta

t

Sig.

Lower Bound

Upper Bound

228.688

164.829

1.387 .171

-101.505

558.881

Transaction

89.785

12.577

64.590

114.980

Services

67.663

27.225

13.125

122.201

Interest

178.305

118.033

## .133 1.511 .137

-58.144

414.754

We observe the p-value associated with interest is still greater than the significant level.
So next we remove the interest variable and run the regression analysis again.

Coefficientsa
Unstandardized Coefficients Standardized Coefficients
Model
1 (Constant)

Std. Error

Beta

t

Sig.

Lower Bound

Upper Bound

258.292

165.490

1.561 .124

-73.096

589.681

Transaction

91.433

12.670

66.062

116.804

Services

67.883

27.529

## .225 2.466 .017

12.757

123.009

We observe that the Adjusted R Square values have declined. Using all four
independent variables the Adjusted R Square value was .555. With the two nonsignificant variables removed the Adjusted R Square value is .53. This means that
the two independent variables account for 53% of the variation in the account
balance.