Global Journal of Human Social Science, E: Economics, Volume 21 Issue 4

g) Diagnostic Test A residual diagnostic test was applied for checking autocorrelation, heteroscedasticity, and serial correlation in the residual. i. Test of Normality To check whether the data used in the model are normally distributed or not, I employ the Jarque Bera test. Here the null and alternative hypothesis are: Ho: The data are normally distributed, and H1: The data are not normally distributed. Figure 4: Result of Jarque Bera test The result of the Jarque Bera test shows that the value of the test is 0.596409 and the corresponding p-value is 0.742150, which is greater than 0.05. that means we cannot reject the null hypothesis. Hence the estimated model is normally distributed. ii. Test for Serial Correlation The existence of serial correlation is tested by Breusch- Godfrey Serial Correlation LM Test. The null hypothesis and alternative hypothesis are: Ho: there is no serial correlation in the residual. H1: there is a serial correlation in the residual. Table 5: Result Summery of LM Test F-statistic 0.687429 Prob. F(2,16) 0.5171 Obs*R-squared 3.165165 Prob. Chi-Square(2) 0.2054 From Table 5, we can see that the Obs* R squared is 3.16 and the p-value is 0.20. Here p-value> 0.05, hence we cannot reject the null hypothesis; instead, we reject the alternative hypothesis, which indicates that there is no serial correlation in the residual. iii. Test for Heteroskedasticity I used the Breusch-Pagan-Godfrey test to detect heteroscedasticity. Here we can take two hypotheses: Ho: Homoskedasticity H1: Heteroskedasticity. Table 6: Result Summery of Breusch- Pagan – Godfrey. F-statistic 0.711667 Prob. F(21,18) 0.7741 Obs*R-squared 18.14540 Prob. Chi-Square(21) 0.6398 Scaled explained SS 2.633745 Prob. Chi-Square(21) 1.0000 Volume XXI Issue IV Version I 39 ( E ) Global Journal of Human Social Science - Year 2021 © 2021 Global Journals An Empirical Analysis of Interest Rate and Domestic Savings in Bangladesh