QuantitativeMethods

The data presented are real. They are the results obtained from the different branches of thebank, after a year of operation. This bank (C) has absorbed two other banking entities (A andB).

We want to know how the Ordinary Margin (which is a measure of the Benefit) of each branchdepends onother availablevariables.Thevariablesare:

1. Ordinarymargin: Measure oftheBenefit
2. Commissions:The amountthateachbranchgets fromcommissions
3. Mortgages:Theamountofmortgage loansthatthebranchhas
4. Promoter:Theamountofcreditsgrantedtorealestatedevelopers
5. InvestmentFunds:Amountinvestedinfundsbytheclientsofthebranch
6. SmallMed:Theamountofcredits grantedto SMEs
7. Consumption:Theamountofconsumercreditsgranted.
8. Unpaid:Cumulativeamountofunpaid
9. Deposits:Customerdeposits
10. Typeofbranch:

1.=The branchwas from BankA

2.=The branch isfromthebuyer bank

3.=The branchisfromBankB

TheBankwantsto know differentaspectsaboutthecompositionofitsbenefit:

1. DoestheOrdinaryMargindependonthe availablevariables?
2. Is it possible to create a model that provides the impact of the partial variables (from 2 to 9)ontheOrdinaryMargin?
3. In case it is possible, we want to know the impact of the variables related to the real statesector (Mortgages and Promoter) on the Ordinary Margin. The director of Real State is veryinterestedinknowingtheimpactofBOTHvariablessimultaneously.
4. Itisalso important toknowthe impactthattheinvestmentinFunds hasforthe branches.

1. Are there differences between the branches of the Buyer Bank (C) and the two absorbed (AandB)?

F. Finally, the bank will give a bonus to the directors of the 8 branches with the best results.Suggestsomemethodologytodothis.

Presentation:

You have to submit two reports. The first report is a technical one. It is going to beread by people with a good Statistics / Econometrics background. It must have thefollowingsections:

1. Introductionandobjectives.

Explainthe dataandourobjective.

1. Variablesthat influencethe ordinarymargin

Here you must explain why we estimate the optimal model, taking intoaccountthecollinearity problem,whichleadsusto the nexttwosections.

1. Effectof RealEstateonthe ordinarymargin.

Fit a model that include Mortgages, Promoters and other available variablesmaximizingR²

1. EffectofInvestmentFundsonthe ordinarymargin.

Fit a model that include Investment Funds and other available variablesmaximizingR²

1. Differences inprofitabilityofthebranchesaccordingtotheirorigin(A,BorC).

Use the optimal model obtained in section 2 and include the instrumental(Politomous)variable.

1. Bonussharesuggestion.
2. Conclusions

Thisworkmusthave amaximumof8pages.

The second report will be presented to managers without training in Statistics /Econometrics. You must write a maximum of 3 pages in which you are going to answerall the previous questions WITHOUT PRESENTING EQUATIONS. Only tables or nicegraphs made from the results obtained. The tables must be easy to read for non-technicalreaders.

Apossiblesuggestionistobuildsomethinglikethis:

Variableincreased by1% (Onlythisvariable isincreasedandall theothervariablesremainconstant)	% ofIncreaseofOrdinaryMargin
Commissions	***%
CreditsGrantedto SmallMedianComp	***%
Etc

Includesomenicegraphs!!!!!!!