Answer Happy

Using the data provided by the World Bank's Enterprise Survey one of the researchers of XMU wanted to see the relationship between Cultural fractionalization and demand for informal finance in Malaysian firms. He uses the following equation to estimate Y=β0​+β1​X1​+β2​X2​+β3​X3​+β4​X4​+ε equation (1)  Where, Y= Demand forinformal finance (Informal finance is undertaken through private contracts for the launching of new businesses or to fuel business operations when official banks are not available.) X1​= Cultural fractionalization(Cultural fractionalization refers to individuals within a country belonging to many different cultures) X2​= Sizeofthefirm X3​= Firmage X4​= Threeyearsofgrowthinthefirm’srevenues  The estimated equation is as follows Y^=0.982+2.783X1​−0.148X2​−0.010X3​−1.973X4​ Standard Error (0.521)(0.905)(0.804)(0.341)(0.681)R2=0.0711; Number of observations =70​ a. State the assumptions that researcher has imposed to estimate equation (1) to get unbiased estimators. (6 Points) b. Find the independent variable(s) from equation 2 which are affecting the demand for informal finance significantly at 1% ? (7 Points) c. Explain the reasons why the variable(s) of part b affects the demand for informal finance significantly? (6 Points) d. Calculate adjusted R2. What adjusted R2 explains? (6 Points)