Correlation &

Regression
analysis on
savings & Loan
Repayment
Abhishek A Gopa
PES1PG23MB004
Abstract
This study delves into the connection between saving habits and the timely
repayment of loans. By using correlation and regression analyses, we aim to
understand how one's savings behaviour influences the ability to repay loans.
The findings may provide insights into whether a strong savings culture
contributes to better loan repayment. This research is essential for
individuals, to enhance financial literacy and create strategies that promote
responsible borrowing and saving. In this paper there is two variable. ie;
Savings and loan repayment the dependent variable (Y) is loan repayment
and independent variable (X) is savings.
Table of contents
01. 02. 03.
Review Of Research
methodology Data Analysis
literature Primary Data was 12 question with 55
5 Literature review was collected with Google Sample respondents
taken into consideration forms was collected

04. 05. 06.

Correlation &
Hypothesis
Regression Findings
Testing
testing
Null(H0) & Alternative(H1 Correlation & Regression Findings to Conclude
hypothesis testing was testing was done to
done prove the Hypothesis
Research Methodology
1. Method: Primary data
2. Sample size: 55
3. Sampling Method: simple random sampling (Google Forms)
4. Question type: Close ended question type
5. Liker scale: Liker scale is a rating scale used to measure opinions,
attitudes, or behaviours (5 Liker Scale)
6. Analysis: Correlation analysis & Regression analysis
Data Analysis
Correlation analysis
Correlation is a statistical measure that indicates the extent to which two or
more variables fluctuate together. A positive correlation indicates the extent
to which those variables increase or decrease in parallel. A negative
correlation indicates the extent to which one variable increases as the other
decreases. Correlation coefficients can range from -1.00 to +1.00. The value
of -1.00 represents a perfect negative correlation while a value of +1.00
represents a perfect positive correlation. A value of 0.00 represents a lack of
correlation.
Regression analysis
In statistical modelling regression analysis is a set of statistical process for
estimating the relationships among variables. Its focus is on the relationship
between a dependent variable and one or more independent variables. More
specifically, regression analysis helps one understand how the typical value
of the dependent variable changes when any one of the independent
variable is varied while the other independent variable are help fixed.

The group of data to be used involved only two variables; savings and loans
repayment, hence the simple linear regression and correlation analysis shall
be used. The saving is taken to be independent variable (X) on which the
loans repayment (Y) dependent variable.
Hypothesis
Testing
Null Hypothesis (H0): There is no significant
relationship between individuals current
savings habits and their ability to repay
loans on time.

Alternative Hypothesis (H1): There is a

significant relationship between
individuals current savings habits and
their ability to repay loans on time
Correlation
Pearson correlation Formula=

X Y

X 1 0.103

Y 0.103 1

Interpretation:
Pearson correlation coefficient of 0.103 indicates a relatively weak positive correlation between
the two variables, loan repayment (dependent variable) and savings (independent variable). In
this case, r=0.103, which is positive but relatively close to zero. This suggests that there is a
positive relationship between savings and loan repayment, but the correlation is weak. In other
words, as savings increase, there is a slight tendency for loan repayment to increase, but the
relationship is not very strong.
Regression
Formulae: Y= mx+c
Y=dependent variable
a =constant parameter which is autonomous (intercept)
b =parameter which shows the rate of change Y which respect to X (slope)
SUMMARY OUTPUT: Regression Statistics
Multiple R 0.103516683
R Square 0.010715704
Adjusted R Square -0.007950038
Standard Error 1.132627698
Observations 55
Interpretation:
It is important to note that the coefficient of determination (R-squared) is 0.0107, which is quite
low. This value tells us that only 1.07% of the variance in loan repayment is explained by
savings. This means that there are other factors that are more important in determining loan
repayment, and savings is not a very strong predictor.
Conclusion
In this paper “Correlation and regression analysis on savings and loan
repayment”. There are two variable that is dependent and independent. The
dependent variable (loan repayment) and independent variable (savings). The
Correlation between savings and loan repayment is 0.103; R=0.103. This
suggest there is positively weak correlation between savings and loan
repayment. and in regression the slope is 0.17611026 and Y-intercept is
2.370597243. The multiple R-squared is 0.103516683 it means that the
relationship between the X variable and the dependent variable is not
statistically significant, this says saving money is not related to taking the
loan or repaying it.