Query regaring categorical moderation

[divya s]

Hello everyone,

I am currently conducting a moderation analysis in PLS-SEM and have encountered a challenge. My model includes two moderators:

1. A continuous variable (measured on a 5-point Likert scale), which I have successfully analyzed and interpreted.

2. A categorical variable, which is causing some confusion. (My variable is bank type-private vs public)

I have come across conflicting tutorials: one suggests creating dummy variables for the categorical moderator, while another suggests using Multi-Group Analysis (MGA).

Could someone please advise on which approach is more appropriate for my study?"

[Rajinder Kumar]

-For a categorical variable with two options (e.g. Private, public.), no dummy variable needed to create, It is required for more than two options. 

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[Rahul Bora]

For categorical moderator no need to create dummy variable since you have only 2 options. You just need to code the options as binary (0 &1).

MGA is done only when your moderator is affecting all the relationships in the model, if not then please continue with simple moderation.

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[divya s]

Thank you so much for clarifying my doubts.

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