[Limdep Nlogit List] Fixed-effect logit Vs OLS

Md Twyeafur Rahman m.t.rahman at strath.ac.uk
Sat Mar 5 02:19:57 AEDT 2016


I am looking to predict factors affecting the branch placement decision of a bank (binary dependent variable). To do this I have collected information (3020 villages information) on villages where there is a branch and where there is no branch. The immediate higher level administrative unit of village is called Thana. The total number of observations came from 515 Thanas. However, I have observations on the branch placed from 438 Thanas. I have both the information (villages where is no branch and villages where is a branch) from the rest of the Thanas (77).

Now, I am losing observations (observations from those 438 Thanas) when I run fixed-effect logit model (Fixed-effect at Thana Level). However, fixed effect linear regression (linear probability model) does NOT drop any observations. Why this is happening? What are the underlying statistical assumptions behind these two model. Could you please explain me this?

I would highly appreciate your response.

Many thanks in advance.

Kind regards

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