Assumptions in Tobit regression

[Nidhi Thakur]

Hi everyone,  my dependent variable lies between 0-0.5 as diversification index measuring diversification between interest and non interest income, I have planned to use Tobit regression due to limited dependent variable,  should I use Tobit regression, if yes please tell me commands in stata how to check heteroscedasticity and normality in case of Tobit regression in panel data. 

[Miklesh Yadav]

Dear Nidhi Jee,

In this limited dependent variable, if your DV is censored in nature then you can apply tobit regression. If it is not censored, go for logit and tobit. In case of tobit regression, the assumptions of the OLS model are considered.

Regards

On Fri, Jul 1, 2022 at 5:50 AM Nidhi Thakur <nidhitha...@gmail.com> wrote:

Hi everyone,  my dependent variable lies between 0-0.5 as diversification index measuring diversification between interest and non interest income, I have planned to use Tobit regression due to limited dependent variable,  should I use Tobit regression, if yes please tell me commands in stata how to check heteroscedasticity and normality in case of Tobit regression in panel data. 

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