Abstract:
This study aims at determining the use of Multinomial Logistic Regression (MLR) model which is one of
the important methods for categorical data analysis. This model particularly deals with one nominal or
ordinal response variable that has more than two categories. Despite the fact that many researchers have
applied this model in data analysis in many areas, for instance behavioral, social, health, and educational, a
study on spending habits of University students have never been done. To identify the model by practical
way, we conducted a survey research among students from University of Embu. Segment of the population
of students in undergraduate level, a sample of 376 was selected. We employed the use stratified random
sampling and simple random sampling without replacement in each stratum. The response variable consisted
of five categories. Four of explanatory variables were used for building the primary (MLR) model. The
model was tested through a set of statistical tests to ensure its appropriateness for the data. From the results,
the study reveals that year of study, family financial level, gender and school are significant factors in
explaining spending habits of students. Despite the fact that gender is one of the deterministic factors of
financial behavior of student, this model identified family level of income as a major deterministic factor.
Conclusively, using MLR model accurately defines the relationship between the group of explanatory
variables and the response variable. It also identifies the effect of each of the variables, and we can predict
the classification of any individual case. The researchers recommend that, the Universities peer counselling
department, should hold trainings on the basis of major determinant of financial spending behavior i.e.
family financial level.
