Chapter 3 Methodology

This third chapter discussed the methods that the researcher has used in order to collate and evaluate the data in accordance to the goal of the study. Methodology is like a strategy or plan for achieving some goal; methods are the tactics that can be used to service the goals of the methodology. In essence, methodologies provide the blueprints that prescribe how the tools should be used. Considerably, the researcher used a structured questionnaire as the instrument of the study. Data gathered from the survey questionnaire are used to gauge the perceptions of the participants about the efficiency performance of Malaysian commercial banks.

3.1 Research philosophy

An interpretivist approach was used in the study since the method used is exploratory as the study aimed to determine present facts and present facts that are not yet explored about the efficiency performance of Malaysian commercial banks. As already noted, the study explored the current level of performance of Malaysian banks including the key factors of scale economy and their operating conditions. What scale is currently in used in improving operational and cost efficiencies are also explored. The study operated in a cross-sectional design using a structured questionnaire. This design enabled the study to focus on the breadth and depth of the research while also minimizing confounding variables.

In particular, the philosophy adapted for this study dissertation is interpretive epistemology which simply refers to the philosophical underpinning of the research. Interpretive epistemology has a basic assumption that knowledge can only be created and understood from the point of view of the individuals who live and work in a particular culture or organisation. Therefore, every individual acts in situation and makes sense of what is happening based on experiences of the situation and the expectations people bring into it. This means that there may be different understandings and interpretations of reality and interpretive epistemology leads to accessing meanings made by others and describe how they come to make those meanings (Hatch and Cunliffe, 2006, p, 14).

3.2 Research design

This research operated within the cross-sectional design, as data on more than one case, using questionnaires were collected. Towards the latter part of the research, a comparative design to compare which concepts is similar and different when it comes to operational efficiency and cost efficiency and then the overall performance of the participating commercial banks.

3.3 Research strategy

The research was approached in a descriptive manner. A descriptive research intends to present facts concerning the nature and status of a situation, as it exists at the time of the study and to describe present conditions, events or systems. As a descriptive research also, the study concerns the relationships and practices that exist, beliefs and processes that are ongoing, effects that are being felt, or trends that are developing (Creswell, 1994). The researcher opted to use this kind of research considering the desire of the researcher to obtain first hand data from the representatives of the Malaysian commercial banks being surveyed.

Fundamentally, a descriptive research utilizes observations and surveys. That is the reason this approach was chosen by the researcher, whose intention is gather first hand data from respondents. Furthermore, it also allows flexible approach that when new issues arise during the study, a further investigation can be conducted in order to fill the gap. Apart from this, the research will also be allowed to drop different unproductive areas of research from the original plan of the study. Above all, it will be fast and cost-effective.

3.4 Sampling

There are specified criteria wherein respondents must belong. A total of 100 representatives were targeted as samples. For the purpose of conducting the sampling strategy, Actually, convenient sampling is the sampling design of this study; it is the most appropriate design to use in this study since the researcher decided the sample size of the study i.e. 15 survey questions are chosen as per the questionnaire. This design is popular in the field of opinion research because it is done by merely looking for individuals with the requisite characteristics.

3.5 Questionnaire development

To assess the problem in hand, the researcher prepared a questionnaire for the survey that is asked to the intended respondents. It was indicated that this will be answered with no more than 10 minutes of the respondents’ time. Further, the answers was completely anonymous and confidential and if there were any particular questions the respondents do not want to answer, it was a standard that they should inform the researcher. The entire questionnaire was constructed in English and in layman terms so that all the respondents would not encounter any difficulties comprehending the questions. The survey questionnaire is divided into two parts: personal data and perceptions regarding performance efficiency of commercial banks.

Questionnaires will concentrate on reviewing the current performance efficiency of the bank based on the perception of the subjects. Ideas will be sought as to how the current practices of Malaysian Commercial banks could be used to enhance the bank performance, and assess how confident the subjects feel in stimulating such developments.

A covering letter will accompany each questionnaire with a prepaid return envelope. This letter will provide an introduction of myself and explain the purpose of the study, provide my contact address, e-mail address and numbers, assure respondents of the confidentiality of their replies, provide the date by when a reply is required and finally, thank all respondents and invite further comments, suggestions and questions.

A five-point Likert scale was also used to measure agreeableness/disagreeableness of the respondents on the statement provided. In the Likert scale, the response is given numerical values which range from 1.00 to 5.00 so that all the numerical value could be calculated from all the responses. The given equivalent weights for the answers were:

Range Interpretation

0.00 – 1.49 Strongly Disagree

1.50 – 2.49 Disagree

2.50 – 3.49 Uncertain / Neutral

3.50 – 4.49 Agree

4.50 – 5.00 Strongly Agree

3.6 Measurement

The research also utilized a bivariate analysis wherein two variables were simultaneously analyzed. Bivariate analysis is performed to determine whether one variable is related to another variable. As such, the study tested for association and causality wherein association is the extent to which a specific variable becomes dependent on another variable. The measure of association then helps to understand the relationship between variables. Correlation, which is a single number that describes the degree of relationship between two variables, was used for this study.

3.7 Data collection

The research utilized both primary and secondary research, using structured questionnaire for the former and literature review for the latter, respectively.

3.7.1 Primary data

Further, a survey questionnaire will be designed especially for this project. A structured questionnaire will be used for this study. This research will use a mixture of closed questions and more open comments in the questionnaire. It is also planned that the questionnaire will include a five-point Likert scale questions. A total of 100 questionnaires usable for the purpose of this study is the goal. Responses on the questionnaire will be analysed quantitatively. Also, the goal is to accomplish the questionnaires as the closest time possible to avoid human errors. It is also personally explained to the respondents the aim of the study and how their contributions would be of significance.

Survey was chosen as the means to collect the primary data due to the fact that it can help to understand the respondents as well as define the existence and magnitude of the problems (Commonwealth of Learning, 2000). In addition, the survey data can also help to determine the different issues that are related to commercial banking in Malaysia.

3.7.2 Secondary data

For this research, a significant amount of publicly published data pertaining to the efficiency of commercial banks in Malaysia at the academic level is required. The source and availability of the data have been verified. The following databases include Malaysian major commercial bank’s Websites and Google search sources. Further, a considerate amount of data and empirical results are available from the academic resources of Malaysian Universities, including academic books, in particular, academic journals from electronic databases in the subject area of acceptance of Internet banking.

Studies on this area are limited from a range of textbooks, especially on the Malaysian commercial banking market. However, almost all commercial banks and countries have developed their own Websites and studies. Thus, Most of the journal articles will be retrieved online through the EMERALD database. Secondly, as this study is related to bank performance, journals from finance, information management, International Journal of Bank Marketing and service marketing will be adopted.

3.8 Data analysis and presentation

Quantitative analysis is applied. The survey data were analysed using descriptive statistics, based around a number of propositions that the study identified. Weighted mean and percentage and median are calculated. The following statistical formulae are utilised:

1. Percentage – to determine the magnitude of the responses to the questionnaire.

Where:

n – number of responses

N -total number of respondents

2. Weighted Mean – to distinguish the peak of the responses to the questionnaire.

where: – weight given to each response

– number of responses

– total number of responses

- weighted mean

To compute for the weighted mean, the values or frequency of the responses of the subjects were used in accordance to the ranges of answers detailed in section 3.5. For instance, let say in the 1st statement of questionnaire, there are 11 respondents who answered 5, 54 for 4, 32 for 3, 2 for 2, and 1 for 1. This also means that 11 respondents strongly agreed on the statement “The Malaysian Commercial bank management is addressing the need to cope with business changes”. 54 out of 100 subjects agreed, 32 were uncertain, 2 were disagreeing and only 1 subject was strongly disagreed. Using the weighted mean equation, we have

Comparative contextual analysis refers to the method of comparative research whereby contextual analysis of similarities and differences is possible. Analysed data are presented in written format coupled with tabular and charts illustrations.

When the entire information from bank’s respective websites have been collected, the researcher used statistics to analyze all the ratios; and was assisted by the SPSS in coming up with the statistical analysis for this study. For the details gathered from journals, an evaluation was drawn in order to identify factors pertaining to the financial status of the banks with regards to current Financial crisis. Moreover, this research will utilize the several statistics in order to determine the differences and compare the past and previous performance of Commercial banks in Malaysia in terms of profitability ratio, liquidity ratio, efficiency ratio and ROCE.

The researcher was aided by the Statistical Package for the Social Sciences (SPSS) in the making and creation of the statistical analysis for this study. SPSS is one of the mainly and extensively accessible and potent statistical software packages that has a extensive range of statistical practices, which permits a researcher to sum up information (e.g. calculate standard deviations and means), identify whether there are major differences between groups (e.g., ANOVA & t-tests), observe relationships among variables (e.g. multiple regression & correlation) and graph output (e.g. line graphs, bar charts, pie chart, etc.) (Einstein & Abernethy, 2000). And from the ratios collated, the researcher will be using the paired-sample t-test.

3.8.1 Paired Sample T-test

Basically, Creswell (1994) stated that the paired sample t-test is the most commonly used method to evaluate the differences in means between two samples. For example, the t-test can be used to test for a difference in the past performance of a certain firm (i.e. financial ratios in 2009 and 2010). Theoretically, the t-test can be used even if the sample sizes are very small, as long as the variables are normally distributed within each group and the variation of scores in the two groups is not reliably different Creswell (1994). And since we were be dealing of financial ratios in which the numbers are fixed then paired sample t-test would be appropriate. As mentioned before, the normality assumption can be evaluated by looking at the distribution of the data (via histograms) or by performing a normality test. The equality of variances assumption can be verified with the F test, or you can use the more robust Levene's test Creswell (1994). If these conditions are not met, then you can evaluate the differences in means between two groups using one of the nonparametric alternatives to the t- test. Actually, the researcher opted to use paired sample t-test analysis to determine the difference between the past and current performance among banks in order to identify if the financial crisis of 2008 created an impact to them.

In addition, the p-level reported with a t-test represents the probability of error involved in accepting our research hypothesis about the existence of a difference Creswell (1994). Technically speaking, this is the probability of error associated with rejecting the hypothesis of no difference between the two categories of observations (corresponding to the groups) in the population when, in fact, the hypothesis is true.

As pointed out by Creswell (1994), that if the difference is in the predicted direction, you can consider only one half (one "tail") of the probability distribution and thus divide the standard p-level reported with a t-test (a "two-tailed" probability) by two. However, the report should always standard, two-tailed t-test probability. Apparently, when testing for a relationship between two variables, sometimes there is a 3rd variable, which we are not interested in at the moment, which influences the results.

So, the null hypothesis (Ho: x and y are independent), can also be written as:

Ho: mD= 0, where mD = population mean of difference scores

df = N - 1, where N = the number of pairs of participants

Then, using the standard "template" suggested by Creswell (1994) for our inference test, we have:

3.9 Limitations of the research design

During the course of a study, limitations in the methods used will likely surface. Some findings will be ambiguous. New questions will occur as the study is in progress. These can serve to formulate useful recommendations not only for additional research but for methods to effectively address them. The limitation of this study was that many potential sources of selection bias would occur as the researcher has the full power to determine which and whom to include in the study as the respondents. In addition, purposive samples cannot represent any population, and this may limit the generalisability of this study. Other constraint can be the time constraints. In making sure that the study goes well more time will be used. Another constraint is the confidentiality of information. Participants in the study may not be keen to provide information. Lastly a constraint for the study is the unwillingness of some people to participate.

3.10 Timeframe

First thing to be done is to collect the necessary data and information. This includes collecting data from primary and secondary sources. Within this time frame, the instruments have been formulated and ready for use, the data gathering methods will be conducted together with the respondents. This took at least a month. After gathering such data, the next thing to be done is analyzing it to use it in the study. Such a process was done for a period of two to three weeks. The next activity is formulating the literature review and subsequent chapters. Within the said activity, the data is integrated with the research, and the related literature is included. This is done in three weeks. The next activity is formulating the last few chapters of the study wherein the data gathered from the survey is integrated and the analysis of the data is included in the research. This is done for another three weeks to ensure that the study is done well. The last activity is finalizing the paper and preparation to present the results of the study.

3.11 Ethical considerations

3.11.1 Informed consent

The study upheld the right to privacy of the respondents wherein the confided information will not be taken against their profession. Adequate information about the nature of the research was provided for them. Respondents also hold the right to ask questions regarding the study itself. Likewise, participants are also assured that the information they have provided will be used accordingly. It is in this way that the answers are given appropriate treatment. Their consent was documented through written consent forms.

3.11.2 Issues on Confidentiality

Confidentiality is apparent on how the study had made use of the data such as this dissertation report. Confidentiality is an important aspect of the research because it can help in making sure that participants will have the trust and confidence to indulge in research undertakings in the future. The study has not violated confidentiality hence will not disclose personal information about the project managers as the respondents. Respondents are also given the right to access the desired results.

As stated in this chapter, the researcher will undergo stages. In the research design, the researcher will collect secondary data and will formulate and develop the questionnaire and interview. In this stage, these instruments will be subjected to approval and validation. During the data collection, the researcher will collate and summarize the data that will be obtained from the fitness reports, questionnaire and survey. The researcher will then analyze these data and from these, findings and recommendations will be presented.

The researcher is solely accountable for performing the entire research procedure and should follow all the policies of banks and the university as well. The data will not be transferable for any means in individual or any organisation. The research should be done following the guidelines and rules and regulations issued by. Thus, the researcher should not belong to any organisation to distribute the outcome of the research results. Both confidentiality and anonymity should be maintained of the respondents who have joined or shared information in the research. There should be no coercion or force to take advantage from the subjects. Full voluntary guarantee should be taken from the subjects.

There should be no misrepresentation and misuse of the information gathered from the organisation in which strict confidentiality should be sustained. The information gathered might be taken by the University for Dissemination of academic reasons. The Research information should not be distorted, keeping in mind the rivalry of market in the society. The information is kept back with high secrecy and it is simply for the academic reasons. It should be not distributed or shared out for profit reasons.

3.12 Chapter Summary

In summary, the researcher took four major phases to complete the study.

Phase 1: Problem Identification for Research - In the first phase, the researcher identifies the specific focus of the problem to be researched. This involves reviewing existing theory, research, and practices from professional literature. This process helps me integrate theoretical perspectives and empirical findings with my own understanding of the problem, and discern the aspect of the problem the researcher want to research and learn more about.

Phase 2: Administration of the Instrument - After reviewing literature, the researcher formulates questions for the survey and makes a set of guide questionnaires for the interview. These are then presented to the advisor for validation purposes. After this the researcher will initiate a process of building collaborations with the respondents who will participate in the study.

Phase 3: Data Collection and Analysis - In the third phase, the researcher collected and analyzed data for the purposes of identifying critical contextual variables specific to their setting. These data will enable me to achieve a specific understanding of the problem.

Phase 4: Data Synthesis and Generation of Recommendations - In the fourth phase, the researcher synthesized findings from the previous phases and relevant previous research. The focus of this stage is to synthesize these data to modify existing hypotheses and account for different factors, as well as generating recommendations based on new understandings. During this phase, research-based recommendations for action will be generated.