Presented below is the regression result on the determinants of bank profitability of a country banks.
ROA=2.840(2.301) + 0.085CAP(0.125) + 0.259LAD(0.055) + 0.056DEP(0.026) – 0.035Z(0.005) Adjusted r2 = 0.645 N.B Figures in parentheses are the standard erros of the estimates. ROA-Return of Assets(measure of profitability) CAP-Capital Adequacy LAD-Loans and Advances DEP-Total Deport Z-Bank Size
Required: (i) Conduct the relevant test of hypotheses at 5% level of significant taken the critical value of “T” = 2.655 and explain the result of the study. (ii) Explain the significant of the adjusted r2 = 0.645. (iii) What conclusion can you draw from the study.