Paste your essay in here…1.0 Introduction
The dissertation will investigate the relationship between university student knowledge of relevant financial concepts and terms in conventional and Islamic banking, the impact of religion and language, and other individual variables on preferences for financial services. Data from a university undergraduate business degree student from UKM (Malaysia National University) will be used to investigate the role of financial knowledge, religion, and language on self-reported attitudes and preferences for financial services.
2.0 Background Literature
Islamic banks have been operating like other traditional bank about four decades. They also mobilize deposits and produce loans based on Islamic Law (Sharia), which are different from the other conventional or commercial banks. Therefore, Islamic banking differs from conventional banking in several ways, such as the prohibition of transactions based on interest rate and the requirement that bank’s operations be carried out according to certain procedures through the use of certain financial instruments (AbdulQawi & Lynn, 2001).
As Islamic banks have started to be applied in Muslim countries, several research on the perception of Islamic and conventional banking has been made in such country such as Tunisia (Aida & Imen, 2014), Pakistan (Masood, Rehman, & Abdul Rehman, 2014) and Nigeria (Ezeh, Nwankwo, & Obiesie, 2015). These researches were made on the students, customers, and corporate customer and the outcome show that different customer demographics show a different perception of Islamic and conventional banking.
While the growth has been most noticeable in Malaysian markets, the potential has impact beyond these fertile markets of Muslim and non-Muslim consumers and businesses as well. Yet, our knowledge of consumer motivations for choosing Islamic versus conventional banking services is modest and the research to date is limited and ambiguous. On these key issues, especially in Malaysia there are only one research that has been done to the IIUM (International Islamic University Malaysia) students by Khaliq Ahmad in 2011. There are also a perception survey being done to the corporate customer and they find almost half of the individuals surveyed (from 100 respondents) who had financial decision-making authority in the Malaysian corporate sectors believed that the Islamic banking system had a good potential as an alternative to the conventional system (Ahmad & Haron, 2002). In 2009 there is a survey being held to know the customer satisfaction in the Malaysian Islamic Banking, the result state the bank need to ensure their service quality to gain customer satisfaction and loyalty (Osman, Ali, Zainuddin, Wan Rashid, & Jusoff, 2009).
Perception is a man’s primary form of cognitive contact with the world around him. Adeyeye (2010) cited that perception of customers towards the quality of service by an organization has a significant relationship with performance of the organization. This study in Nigeria had findings which indicated that customer trusting the organization, bonding between employees and customers perceiving the organization as caring all had significant influence on performance of the organization. Therefore it is important to know the perception of the undergraduate business degree in UKM as they will become the potential customer of the banks and their perception may affect both Islamic and conventional bank.
Malaysia is one of the Muslim countries that is committed in not only developing an Islamic banking system, but also a complete Islamic financial system. The Islamic banking system in Malaysia started in 1983 when the first Islamic bank, Bank Islam Malaysia Berhad (BIMB) commenced its operations (Sole, 2009). It was the objective of the Malaysian government to develop the Islamic banking system parallel to the conventional system. Instead of establishing many new Islamic banks, the government introduced a concept of ‘Islamic window’ which allows the existing conventional banks to introduce Islamic banking products of customers. The concept of Islamic window started in March 1993 when the Central Bank of Malaysia or (Bank Negara Malaysia) introduced the “Interest-Free Banking Scheme” (Bank Negara, 1999). Twenty-one Islamic financial products were developed to cater for this scheme with only three major banks participated initially. By July of the same year, this scheme was extended to all financial institutions in Malaysia. As at 7th October 2015, the Islamic banking system in Malaysia was represented by 16 Islamic Banks including 6 foreign Islamic Bank (Malaysia, 2015)
As a result, Islamic banks of national financial systems are not only in Muslim dominated countries like Malaysia but also the country with Muslim minorities such as Singapore, the UK and Kenya. Even more interesting is that many non-Muslims have also come to realise certain desirable aspects of Islamic banking (El Qorchi, 2005)
3.0 Rationale
Islamic finance has begun to grow rapidly since the year 2000, Malaysia has become one of the pioneers in developing products for Islamic Banking but still our knowledge of consumer motivations for choosing Islamic versus conventional banking services is modest and the research is limited and ambiguous on these key issues. This is important to the researcher and the financial service provider to know what makes them choose between these two services, whether because of gaining higher profit or religious issue.
4.0 Aim and Objectives
4.1 Aim
The research will investigate the perception of UKM undergraduate business students regarding Islamic versus conventional banking based on their demographics background and knowledge.
4.2 Objectives
• To identify the factors that affecting the perception of UKM’s student towards Islamic and conventional banking
• To analyse the student perception on Islamic and conventional banking
Choosing the right research method is vital, it is important to look at all the different potential methods that could be used, to decide which is best suited for this research. There are two main types of research primary and secondary. Primary research is new data collected specifically for the purpose of this research, secondary research is analysing data that have already been collected for another purpose (Saunders, Lewis, & Thornhill, 2009). For this dissertation primary research will be collected and analysed using SPSS.
For this research, qualitative data and quantitative data will be collected. The qualitative data will be the interview within the UKM (Malaysia National University) undergrad business degree and for quantitative data a generalised online and hardcopy questionnaire will be given only to the UKM (Malaysia National University) undergrad business student. The data collected by the questionnaire will then be analysed using the SPSS to see if the student knowledge and demographic have an effect to their perception. Only 10% of the data is from interview and 90% from the questionnaire. The 10% of the interview will be used to clarify the findings in the questionnaire so the results will be solid to prove what the student perception on Islamic and conventional banking is.
Here, the author will outline the framework from which they will conduct their research. Collins (2009) explains that the rationale for doing academic research is to inform the researcher on a certain subject area. The design of this research must be suitable to the research needs and help the author achieve the papers aims and objectives (Bryman & Bell, 2011). Saunders et al (2009) formulated a model known as the ‘research onion’ by which researchers can check the rationality of their proposed research approaches as they go through each ‘layer’ of the onion. The author will use this as a pathway and justify each choice.
Here the author will give reasons for their chosen pathway:
(Saunders, Lewis, & Thornhill, 2009)
Cross sectional – Most research projects undertaken for academic courses are necessarily time constrained (Saunders, Lewis, & Thornhill, 2009). Therefore, this design is suitable for the research because of the time limit. This design takes a sample from the overall population and is only collected once in the form of questionnaires or surveys. This is a good approach for the purposes of this research as it will help determine a wide range of student perception toward Islamic and conventional finance.
Mixed methods – This, as the name suggests, is an approach that incorporates a few different methods to obtain data (Bryman & Bell, 2011). The author plans to use a mix of surveys, interview, and data analysis to come to conclusions. Although mixed methods research has been questioned for it being in its adolescence and confusing to some traditional researchers (Leech & Onwuegbuzie, 2009), the author feels it is to their benefit to utilise all available and appropriate techniques.
Survey – Conducting surveys is the way the author plans to collect people’s perceptions and knowledge towards Islamic and conventional banking.
Inductive – This approach follows data gathered (Saunders, Lewis, & Thornhill, 2009) and will allow the author to investigate.
Positivism – This philosophy will allow the author to make sense of what data there is available objectively. The research undertaken will in no way be affected by the researcher and Saunders et al. (2009) states that it is highly appropriate for the aim of this research.
6.0 Ethical Considerations and Limitations
For both, the questionnaires and the interviews, consent will be required from the person answering the questions. Also informing the respondents that they will be anonymous is important as it should mean they are more likely to answer honestly (Mitchell & Jolley, 2007). To avoid getting any children replying to the questionnaires, the respondents will be asked to confirm their age.
There are a few limitations of this research methods, firstly the sample of the research is only given to the UKM undergrad student on business degree. Therefore, they may have a basic knowledge about the financial system and the result cannot be applied to other student from different program and course. Another limitation is the survey will only be made to only one University and the result cannot be related to other students in Malaysia.
7.0 Resources and Planning
Resources to be used in this dissertation include the use of books, journals, reports, and credible websites. These can be obtained from libraries, book shops and the internet. Literature read must be relevant to the subject matter, aims and objectives (Oliver, 2012).
The internet can be a useful tool in gathering data, however, sometimes this can be difficult and the sources of some data can be questionable (Saunders, Lewis, & Thornhill, 2009).
Below is a Gantt chart outlining the tasks that need to be completed and what the time frame is for their completion: (not yet)