Neew help with using dummy variables

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TheDiplomat
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Joined: Tue Dec 19, 2017 8:51 pm

Neew help with using dummy variables

Postby TheDiplomat » Tue Dec 19, 2017 9:32 pm

Hey members, a newbie to SPSS here and need help. Any help is extremely appreciated.

My question revolves around dummy variables, how to physically implement them correctly on SPSS? I have only seen simple examples (gender, male female etc) but cannot grasp the concept when working with percentage points datasets.

I am working on a thesis where I examine the negative interest rates impact on banks' profits.
I examine two countries banking sectors, Germany and the UK. I examine the years between 2012-2016.
The programme of negative interest rates started in 2014.

I'm working with Differrence-In-Difference method. The Control group is the UK and the Treatment group is Germany.

My equation is this:

𝑦 = 𝛽 + 𝛽1π‘‡π‘Ÿπ‘’π‘Žπ‘‘ + 𝛽2π‘ƒπ‘œπ‘ π‘‘ + 𝛽3π‘‡π‘Ÿπ‘’π‘Žπ‘‘π‘ƒπ‘œπ‘ π‘‘ + 𝛽4 π‘…π‘Žπ‘‘π‘’π‘  + 𝛽5π‘†π‘π‘Ÿπ‘’π‘Žπ‘‘ + 𝛽6𝐺𝐷𝑃 + πœ€

y= Return on Assets (Profits)

The 𝛽1π‘‡π‘Ÿπ‘’π‘Žπ‘‘ variable is a dummy (=1 If the country implemented the programme)

𝛽2π‘ƒπ‘œπ‘ π‘‘ is also a dummy variable (=1 After the implementation of the programme)

𝛽4 π‘…π‘Žπ‘‘π‘’π‘  is 3-month government bond

𝛽5π‘†π‘π‘Ÿπ‘’π‘Žπ‘‘ is the spread between 10-year and three-month bond.

𝛽6𝐺𝐷𝑃 is GDP growth rate.

So now you guys hopefully got a better picture of what I am dealing with, how do I create a dummy variable with this kind of dataset in mind?

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