Essentials Of Econometrics 4th Edition Gujarati Test Bank Rar
Eliora Shopbell
The objective of this paper is to analyze the impact of IT investments in the operating income of Brazilian banks. In order to test the relationship between the variables involved, econometric quantitative instruments had to be used, since they allow to build models and to mathematically represent the real world (PINDYKC and RUBINFELD, 2004). Econometrics was applied because it allows, among other possibilities, to confront economic theory with facts and to test hypotheses involving economic behavior (RAMANATHAN, 1992).
Figure 2 shows the study design, including its different steps. On step 1, a literature review was conducted in order to get deeper knowledge about how the impact of IT investments on organization results are assessed. Moreover, it was necessary to turn to the production theory and econometrics for the elements that should specify the Cobb-Douglas model used. Step 2 comprehends the collection, analysis and preparation of data. On this step, STATA software was chosen for the analysis. The dashed line, which involves the first and second steps, shows that they occurred in parallel. On step 3, the econometric model specified was pre-tested with data for 2007 and 2008. Once the model was validated and the data prepared, the study proceeded to step 4, on which 4 different types of analysis were conducted regarding IT investments in banks.
The results found were analyzed in economic and statistic terms. According to the statistical significance of the two explanatory variables, determined by their t-statistics, the results showed that they were statistically significant for all years analyzed, as they had values above 2 for all years. Besides its relevance to test the hypothesis, the fact that t-statistic presents values above 2 is relevant to deal with the question of multicolinearity in Cobb-Douglas functions. According to Kennedy (2008, p. 196), the existence of multicolinearity in a Cobb-Douglas production function is natural, and although capital and labor variables have a high collinearity, solid estimations are produced. According to the economic significance suggested by the coefficients of regression (or betas) and their signs, evidence was found that variations in IT investments (ITI) or in personnel expenses (EP) have a significant, positive impact on the operating income (OI) of banks. The coefficient for IT investments (β1) varied from 0.2665 the 0.3671, and the coefficient for personnel expenses (β2) varied from 0.3597 to 0.5647. Betas β1 and β2 represent the partial elasticities of the dependent variable (OI) in relation to the independent variables (ITI and PE).
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