If the correlation is large but negative, given theoretical justification, the loading can be forced to be equal but of opposite sign. If all of the loadings are free and the disturbance or residual variance is fixed, empirical identification problems can occur if the multiple correlation for that latent variable is very large. That is, there must be discriminant validity . In the structural model , there are a set of structural equations. The causal variables are called exogenous variables and the effect variable is called the endogenous variable .
Unexplained variation is referred to as disturbance .
Minimum Condition of Identifiability Let k be the number of constructs in the structural model . Theory places restrictions on a. If a structural model satisfies this condition, then the model may be identified. Although there is no known proof of this condition, there is no known exception. It seems likely that the rule holds.