This paper is basically focused on the issue of Islamic banking operation as compared to conventional banking: in context of bank Al-Rayan bank and HSBC”. Islamic banking is based on the Islamic faith and the activities are conducted within the Islamic law (Iqbal and Molyneux, 2016). The origin of Islamic banking dates back from the beginning of Islam in the seventh century. As per the principles of Islamic banking charging of interest on the borrowings is prohibited. The economic activities are avoided that involve oppression or unjust treatment. In Islamic banking there is discouragement of the production of goods and services that contradict the value of Islamic. Conventional banking is based on the debtor and creditor relationship between the depositors and the bank. In this interest is considered to be the price of credit and also reflects the opportunity cost of money. In conventional banking the investor is assured of a predetermined rate of interest. It does not deal with zakat. The main aim of conventional banking is to maximize profit without any restriction. The conventional banks provide greater focus on credit worthiness of the customers. The status of a conventional bank in connection with the clients is of creditor and debtors (Hanif, 2014).
The research subject is “to analyse the issue of Islamic banking operation as compared to conventional banking: in context of bank Al-Rayan bank and HSBC”.
Aims and Objectives
The main aim of this research is to address the issues of Islamic banking operation as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. For completing this aim, a researcher will accomplish the following research objectives:
Research question
To explore rules and regulation of Islamic and conventional banking: in context of Al-Rayan bank and HSBC
Comparative analysis
According to the Gheeraert, (2014) conventional and Islamic both followed different rules and regulation that is the primary issue for the Islamic bank. Islamic banks have used rules and regulation of Shariah while conventional banks utilized the rules and regulation of government in their banking process. In addition, it is also stated that the rules and regulation of Shariah create the issue for enhancing their profitability. Moreover, Islamic is also not able to take extra benefits from services charges as it will create an issue for an Islamic bank to sustain their competency in the marketplace.
On the other hand, Gazzar (2014) explained that the concept of Islamic banking relies on benefits and loss sharing that could be different as compared to the conventional banks. Hence, it can direct impact on the profitability circumstance of an Islamic bank. As a result, Islamic will not be capable to sustain their position in the market. But, at the same time, it can be said that Islamic bank become wide that will be supportive to gain their growth.
To identify key challenges faced by Islamic and conventional banking relating to legislation
As per the opinion of SeHo, et al. (2016) the principles of Shariah is significant for the Islamic bank than the conventional banks because it offers opportunities to make their unique image in the market. But at the same time, it is also stated that profit and loss regulation can directly influence their effectiveness as compared to conventional banks within the non-Islamic region. It is also analyzed that Shariah principles unable the Islamic banks to create more profit on services while the conventional banks will be capable to take many services related benefit. Hence, it is examined that the rules and regulation of conventional banks are flexible than Islamic banks. It is also analyzed that Shariah principle prevents the Islamic bank for investing into many kinds of instruments like improvement of asset quality and liquidity hold.
To recommend strategies in order to eliminate issues faced by Islamic banks which assist in making them compatible with conventional banks
Riaz, et al. (2017) recommended that Islamic banking would adopt a flexible approach to start work in the non-Muslim countries. Under this approach, Islamic banks use the Shariah principles for satisfying the needs of potential consumers. Through this, the Islamic bank will be also capable to offer quality product and services to their consumer and fulfill their needs in less time and cost.
In support to this, Ahmed and Grais (2014) stated that the Islamic bank should also need to focus on modern technologies to attract a large number of consumers and sustain their position in the marketplace. The modern technology will also facilitate the Islamic bank to directly communicate with consumers and understand their actual need as it would support to make a robust relation with them. It is also stated that Islamic bank should imply the Internet-based banking services to their consumers for saving their time and cost. It will support to make a distinguish image in the consumer’s mind.
This chapter supports the research scholar to comprehend about the research methods with respect to obtain the feasible outcome in terms of Islamic banking operation issue as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. Furthermore, research methodology considers many methods like research philosophy, data collection method, research design, research approach and data analysis method. Moreover, the research limitation and ethical considerations are also considered in the research methodology (Aldohni, 2016). The research methodology will help the research scholar to complete objectives of the research. In addition, it will aid the researcher to solve the matter of research. The aim of this research is to examine Islamic banking operation issue as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. Moreover, in this research study, the researcher will execute many books and journals for collecting the information about the current research matter (Miah and Uddin, 2017).
(Sources: Miah and Uddin, 2017)
For the research study, a researcher will use research onion framework to comprehend towards the methods of research mythology in a systematic manner. It will help the researcher to collect the data context of Islamic banking operation issue as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. The following research methods are included in the research methodology:
3.1Philosophical approach/paradigm
The research philosophy is crucial to collect the opinion and views of the research candidates about the issue of Islamic banking operation as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. Moreover, it will aid the researcher scholar to collect the views and perception of the research candidates in terms of the research matter. In the research philosophy, interpretivism, realism and positivism philosophies are considered to collect the appropriate data (Abdul-Wahab, et al., 2017). For this research study, interpretivism philosophy will be appropriate to obtain the feasible outcome in terms of the Islamic banking operation issue as compared to conventional banking. Moreover, this philosophy will aid the researcher to enhance their consciousness in terms of research matter. Furthermore, a research scholar will improve the quality of research through interpretivism philosophy. For this dissertation, research scholars will not imply the positivism philosophy to complete the research objectives in the specified time period. Furthermore, a researcher will use positivism philosophy if a research study is depended on factual data. Beside this, a researcher will also not use realism philosophy because this research is subjective in nature (Alden, 2015).
For the research study, the research approach plays an imperative role to collect the data in the context of research matter. It will aid the researcher to identify the cause to select specific process of research. In the research study, the inductive and deductive approach is considered in the research approach. The inductive approach facilitates the researcher to get non-numeric information in the context of Islamic banking operation issue as compared to conventional banking. On the other hand, the deductive approach enables the research scholar to develop the hypothesis with respect to the research issue and get appropriate outcome (Zins and Weill, 2017).
On the other hand, the deductive approach will also aid the research scholar to accept and reject research hypothesis. From the utilization of deductive approach, a researcher will easily accept and reject the research hypothesis. In this research study, the researcher will imply the inductive approach rather than deductive approach. It is because the inductive approach will facilitate the researcher scholar to collect the non-numeric info towards Islamic banking operation issue as compared to conventional banking. There is no need to develop hypothesis because this research study is not based on facts and figures. In this research study, the inductive approach will be used by the researcher to enhance the quality of research outcome (Suseno, and Bamahriz, 2017).
Research Strategy
The research strategy helps to attain the specified research objectives in less time and cost. Through research strategy, research scholar will be able to find out a suitable method for getting valid data in the context of Islamic banking operation issue as compared to conventional banking. Moreover, it is also examined that research startegy will enable research to collect the suitable info towards the research subject (Alamad, 2017). For this research study, both qualitative and quantitative redesign will be used by researcher to collect the reliable outcome. Moreover, the qualitative research strategy will enable the research scholar to collect the numeric information through statistical tools and techniques. Apart from this, the qualitative research strategy will facilitate the investigator or research scholar to discover the theoretical information in the context of the Islamic banking operation issue as compared to conventional banking. In addition, the mixed data collection method enabled the investigator to decline the disadvantages of research and get a favorable result. It will also assist the research scholar to attain the research objectives in the specified time frame (Mackey and Gass, 2015).
Method for gaining access to sites, data and or informants
For this research study, the data collection method plays an effective role in identifying the methods to collect the data in the context of the research issue. Consequently, an instigator will be able to accomplish the specified research objectives and research aim. The data collection method involves two kinds of methods like primary and secondary data collection method. The primary data collection method will facilitate the investigator to obtain actual information towards Islamic banking operation issues. Survey through a questionnaire, interview, and observation methods are included in the primary data collection method (Flick, 2015). The primary data collection method emphasized on the fresh or new data. Besides this, the secondary data collection method will allow the investigator to collect information from existing sources in the context of research matter. The secondary data is collected through journals, academic sources, book, reference books, magazine, and company website. For this research technique, an investigator will imply both data gathering technique to obtain the information towards the research matter. Further, it is also examined that the primary data collection method takes more time than the secondary data collection method. Besides this, the secondary data collection method will be expensive than the primary data collection method. Hence, the research scholar will imply both data collection method to avoid disadvantages of both data collection method (Neuman and Robson, 2014).
Sampling Procedure
The sampling is significant for the research study due to collecting the appropriate sample size for performing the particular research study. The probability sampling method will help the investigator to select the research participants on a random basis. Besides this, the non-probability sampling method will allow research scholar to choose the participant’s on behalf of their age, gender, education, and region to perform the research. For this dissertation, research scholar will exercise non- probability sampling method for collecting appropriate information towards the Islamic banking operation issue as compared to conventional banking (Panneerselvam, 2014). The research scholar will select 50 employees as sample size from Al-Rayan bank and HSBC bank. The investigator will select 25 employees of HSBC and 25 employees of Al-Rayan bank as it could be effective for conducting the research appropriately.
The investigator will imply many research approaches to solve the research subject. For this research study, research scholar will use qualitative and quantitative method to evaluate the collected data and improve the reliability of research outcome. Researcher will use the cross sectional and literature review method to examine the non-numeric data and get the feasible outcome. Beside this, researcher will practice MS-excel and present their data through bar diagram, chart, and column chart as it could also be effective for determine the statistical data successfully.
In this, the researcher will practice literature review and cross sectional approach to collect the reliable information about Islamic banking operation issue as compared to conventional banking (Taylor, et al., 2015). The investigator will also practice the literature review in order to obtain the adequate information towards the research dilemma. Through this method, an investigator will be able to examine the existing data, which will be associated with the issue of Islamic banking operation as compared to conventional banking: in context of bank Al-Rayan bank and HSBC. Through the cross sectional approach method, researchers will be capable to get the reliable data from the research participants and attain the research aim (Taylor, et al., 2015).
Besides this, an investigator will imply many sources to collect the data in the context of Islamic banking operation issue as compared to conventional banking. These sources are reference books, reference books, online sites, journal, magazines, and company website. It will support the investigator to collect the reliable information in context of the Islamic banking operation issue as compared to conventional banking. Moreover, it is also examined that the literature review will help the investigator about the research matter (Brinkmann, 2014).
Research Limitations
A researcher will focus on several elements to meet the research aim and objectives of the research study. In this, these factors are time, cost, and resource. Furthermore, a researcher will estimate the time frame to complete any task but at the same time, it will make bounded to research scholar to complete the research their research in less time. Thus, it will decline the quality of research. A research scholar will use the email, survey through a questionnaire for avoiding the research issue and get reliable data. Thus, it will make enable the researcher to make positive relationships with research participants for long-term (Brinkmann, 2014).
The research ethics will be imperative to attain the specified objectives and aims of the research. The investigator will use the rules and regulations of university due to getting the accurate data in the context of research issue. There are many activities that are considered by the researcher to eliminate the ethical issues from the researcher like lack of data manipulation, lack of plagiarism, appropriate referencing, and make secure the confidential data of research participants (Smith, 2015). In this, the research scholar will secure the private data of participants that will be provided by the participants. As a result, the researcher will be facilitated to attain the research objectives in less time and cost. It will also supportive to create a favorable relationship between the research participants and research scholar.
Table 1: Research plan
|
Research acts |
Number of weeks |
|||||||||
|
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
|
|
Research dilemma determination |
y | |||||||||
|
Determination of research objectives and aims |
y |
|||||||||
|
Identify the data collection method |
y |
y |
y |
|||||||
|
Design of questionnaire |
y |
|||||||||
|
Sampling method for sample size section |
y |
|||||||||
|
Data analysis |
y |
|||||||||
|
Final draft and report writing |
y |
|||||||||
|
Final submission |
y |
y |
As per the above research plan, it is also identified that the data collection research activity will be time-consuming than the other research activity.
References
Abdullah, A., and Abdullah, A. (2016) ‘Examining US approvals of Islamic financing products and the Islamic theory of lawful profit’, International Journal of Islamic and Middle Eastern Finance and Management, 9(4), pp. 532-550.
Abdul-Wahab, A. H., Abdul-Wahab, A. H., Haron, R., and Haron, R. (2017) ‘Efficiency of Qatari banking industry: an empirical investigation’, International Journal of Bank Marketing, 35(2), pp. 298-318.
Ahmed, A. M. E. T., and Grais, W. (2014) Islamic Finance and Economic Development: Risk, Regulation, and Corporate Governance. USA: John Wiley and Sons.
Alamad, S. (2017) A Historical Analysis of Financial Innovation in Islamic Economics and Finance from the Sixteenth Century to Present. In Financial Innovation and Engineering in Islamic Finance (pp. 65-89). USA: Springer International Publishing.
Alden, N. S. (2015) Comparative Analysis Between Islamic and Conventional Banking System In Term of Profitability and Governance. USA: John Wiley and Sons.
Aldohni, A. K. (2016) ‘Islamic Banking and the UK New Legal and Financial Regulatory Architecture: The Potential Challenges Ahead’, Banking and Finance Law Review, 31(3), P. 443.
Brinkmann, S. (2014) Interview. In Encyclopedia of Critical Psychology. USA: Springer New York.
Flick, U. (2015) Introducing research methodology: A beginner’s guide to doing a research project. USA: Sage.
Gazzar, M. M. A. (2014) ‘The Financial Performance of Islamic vs. Conventional Banks: An Empirical Study on The GCC and MENA Region’, Faculty of Business, Economics and Political Science Bachelor’s Dissertation/Senior Year Project, British University in Egypt. USA: Sage.
Gheeraert, L. (2014) ‘Does Islamic finance spur banking sector development?’, Journal of economic behavior and organization, 103, S4-S20.
Hanif, M., (2014) Differences and similarities in Islamic and conventional banking.
Iqbal, M. and Molyneux, P., (2016) Thirty years of Islamic banking: History, performance and prospects. Springer.
Mackey, A., and Gass, S. M. (2015) ‘Second language research: Methodology and design. UK: Routledge.
Miah, M. D., and Uddin, H. (2017) ‘Efficiency and stability: A comparative study between Islamic and conventional banks in GCC countries’, Future Business Journal, 3(2), pp. 172-185.
Neuman, W. L., and Robson, K. (2014) Basics of social research. USA: Pearson Canada.
Panneerselvam, R. (2014) Research methodology. USA: PHI Learning Pvt. Ltd.
Riaz, U., Burton, B., and Monk, L. (2017) ‘Perceptions on the accessibility of Islamic banking in the UK—Challenges, opportunities and divergence in opinion’, In Accounting Forum (Vol. 41, No. 4, pp. 353-374). USA: Elsevier.
SeHo, M., Alaabed, A., and Masih, M. (2016) Risk-Sharing Financing of Islamic Banks: Better Shielded against Interest Rate Risk. In Malaysian Finance Association Annual Meeting. USA: Elsevier.
Smith, J. A. (Ed.). (2015) Qualitative psychology: A practical guide to research methods. USA: Sage.
Suseno, P., and Bamahriz, O. (2017) ‘Examining the impact of bank’s risks to Islamic banks’ profitability’, Economic Journal of Emerging Markets, 9(2), pp. 125-137.
Taylor, S. J., Bogdan, R., and DeVault, M. (2015) Introduction to qualitative research methods: A guidebook and resource. USA: John Wiley and Sons.
Zins, A., and Weill, L. (2017) Islamic banking and risk: ‘The impact of Basel II’, Economic Modelling, 64, pp. 626-637.
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