- Multicollinearity is a situation where explanatory variables are highly correlated.
- It is important to check multicollinearity problem for continuous and dummy variables before running the model.
- According to Tabachnick and Fidell (2012), multicollinearity refers to a situation where it becomes difficult to identify the separate effect of independent variables on the dependent variable because there exists strong relationship among them.
- See Bivariate Relationship and Variance Inflation Factors (VIF).