Pilgrim Bank Study A Is there a difference in profitability

Pilgrim Bank Study. A. Is there a difference in profitability across regular vs. online customers? B. How should we deal with missing data? C Using a regression model, is there a difference in profitability across the two customer types and if so, how much are the more profitable customers worth to the bank?

Solution

A. The difference in profitability across regular vs. online customers is determine by correlation cofficient R² . If the value of R² is goes to zero then there is no difference. if R² goes to 1 or -1 then there is srong correlation which means that difference in profitability across regular vs. online customers are more varying.

B. Using regression model to predict the missing data on the basis of other variables that are present. We use existing variables to make a prediction, and then substitute that predicted value as if it were an actual obtained value.

C. Using a regressionmodel, we explain the relationship between a customer porfitable and the variable which effect the profitable

Customer Profitability = f (Online, Demographic variables)

this regression model is for the purpose of explanation more than prediction.