This chapter mainly to discussthe methodologies applied in gathering data and information needed in order tocarry out a successful research study and to contribute to the development of avalid and critical thesis. In particular, this chapter describes how this studyis carried out in terms of settings, sampling size and types, data types andcollection technique, descriptive analysis and types of test that will carriedout.The data uses in the study willconsist of both the independent variable and also the dependent variable.
Thereare two independent variables which are the total financing and also the total depositsof the Islamic banking in Malaysia. The data will be in form of secondary datawhere all of the information will be taken from other sources and not fromprimary sources like questionnaires. In this study, there are two variableswhich is the Islamic Bank’s total financing and total deposits which consist ofthe 16 listed Islamic Banks in Bank Negara Malaysia. This study will includeboth local and foreign Islamic bank that is a fully fledged Islamic bank andbanks that uses the Islamic banking window. The overall population of banksin Malaysia consists of several types of banking financial institutions whichinclude commercial banks for both local and foreign banks, banks with marketingand representative offices in Malaysia, offshore banks in Labuan, investment banks,merchant banks and also Islamic banks. All of the banks are regulated under thesupervision of the Malaysian central bank which is the Bank Negara Malaysia.
For this study, we had chosen a total number of 16 Islamic banks located inMalaysia and they can be from either local or foreign Islamic banks. Asmentioned above, there are three types of Islamic banks in Malaysia namely thefull-fledge Islamic banks which are the local Islamic banks, the foreignIslamic banks and also the conventional banks which have subsidiary that areusing Islamic banking products, called Islamic bank windows.Purposive Sampling – It is a non-probabilitysampling method which selected the variables based on the characteristics and theobjective of the study (ThoughCo.com, 2017). As for this study, we use thetotal population sampling where we selected all of the Islamic banks and Islamicbanks windows in Malaysia.The data type use for the studyis Secondary Data.
Secondary data is the data that have already been collectedand are readily available from other sources. It also means that the materialcreated by other researchers can be reuse by the general research community(Hox and Boeije, 2015).The data gathered for this study were obtained as asecondary data from various sources such as the World Bank archive and alsoannual reports of IB.Data obtained from Annual reportsstarting in the year 2007.
For totaldeposits, it takes into account the savings deposit and demand deposits (Wadiahand Tawarruq), Term deposit which consist of Mudarabah, Bai’Bithamman Ajil,Wadiah and Tawarruq. For total financing it includes Bai’ Bithaman Ajil for house financing and other term financing,Ijarah, Ijarah Muntahla Bittamlik, Murahabah, and other principles. Both of thedata collected were in the unit of MYR currency.The Shapiro-Wilk test is ahypothesis test procedure for determining if samples of data are from the samedistribution or in other words, to check whether the distribution of normal ornot.
The test is non-parametric and entirely agnostic to what this distributionactually is. The fact that we never have to know the distribution the samplescome from is incredibly useful, especially in software and operations where thedistributions are hard to express and difficult to calculate with. The reasonwhy we chose to use the Shapiro-Wilk rather than the other normality test isbecause of its good power properties (Mendes and Pala, 2003).
To observe the basic nature ofthe data, this study used descriptive statistics. Observing the TD, TF and GDPdescriptive statistics helps summarizing the data at hand to represent anypatterns or variations; this includes inspecting their minimum, maximum andmeans (Rashwan, M. H , & Ehab, H. 2016). Standard deviation will also beobserved indicates the variation in the data set and to be checked whether itis close to the mean value.Trend analysis isused in this study in order to find the aspects of the technical analysis ofthe industry that will be evaluated.
The movements of the indicators used forthis study have been analyzed to predict and assume the directions of theindicators which in this case are the total financing of the Islamic banks, thetotal deposits of the Islamic banks and also the economic growth of the countrywhich is being conveyed by using the GDP of the country. By doing this, it canhelp us to understand more about the variables before using the data obtainedto find the objectives stated.To inspect the stationaryproperties of the series using the Augmented-Dickey-Fuller (ADF) testprocedure. The ADF test is used to determine the order of integration of eachseries in the model. The order of integration is established by determiningwhether the series is stationary or non-stationary. If the series is howeverfound to be non-stationary, then the series is differenced, and the resultantdifferenced series is then tested to determine whether it is stationary ornon-stationary (Dickeyand Fuller, 1979).
The hypothesis testing of thisstudy consists of the Spearman Correlation and also the Multiple LinearRegression analysis to find the results which can accept or reject thehypotheses stated. In order to continue with the testing, it is imperative toconsider the fact that the hypotheses stated that there will be two conditionof testing which are the periods of the data used. The first one is theimmediate effect of both of the independent variables towards the dependent variable.It took the consideration of looking on how does the independent variablescould affect the GDP of Malaysia in a 1-year period, hence it was calledimmediate.
While the other one is to find the relationship of the variables ina short term period which in this case is a 5-year period. The formulas todifferentiate the two time frames are as follows:As shownabove, the immediate affect can be evaluated by adding 1 year to a GDP for eachindependent variable that we used. For example, to find the immediate effect ofthe total financing of the year 2014 towards the GDP, we need to add up 1 yearto the GDP which will be 2015.
Meaning that we can now see the effect broughtby the independent variable towards the GDP in the 1 year after. The reason whywe chose to do both the immediate effect and the short-term effect was to seethe comparison between the two time frame and how the independent variables canaffect the GDP. By doing this, we can find whether or not the Islamic banks inMalaysia can affect the economic growth and if they do, how fast can theyaffect it. Furthermore, this is the first study to use the immediate effect on the effectsof the total deposits and total financing of Islamic banks towards the economicgrowth of Malaysia.Spearman Rank Correlation is anon-parametric that is going to be used in this study. It measures the degreeof association between variables.
he Spearman correlation coefficient is usually adopted when the assumption of the bivariate normal distribution is not tenable (R.Artusi, P. Verderio, E. Marubi, 2012). Using sample denoted by rs and is by design will becompelled as followsThe spearman correlation observesthe p-value to determine whether it is significant or not.
If the p-value isless than 0.05, it indicates that it is significant and vice versa. TheSpearman Correlation can also be interpreted by examining how the sample isclose to ±1 the higher the strength of bothvariables towards one another. Correlation isan effect that can be describe the strength of the correlation using thedescription given below for absolute value rs: The regression analysis will be used in order toestimate the relationship among the variables whether they have positive ornegative relationship with each other. It is to investigate the linearrelationship between IV and DV (Yan, Xin 2009).
One variable is considered tobe an explanatory variable and the other is considered to be a dependentvariable model (Stat. 2016). Multiple linear regressions (MLR) however, are amethod that uses several explanatory variables to predict the outcome of aresponse variable.
The multiple linear regression equationfor this study can derive as follows:In order to know the significantbetween all variables, we will observe the F statistics and probability. If theprobability is <0.05, it shows significance between variable and will beinsignificant if >0.05. F statistic is a value derives from running anAnalysis of Variance (ANOVA) in the regression analysis to find out if themeans between variables are significantly different. F test will show if agroup of variables is statistically significant.
Overall, the sources of secondarydata, the sampling size, data collection technique, trend and descriptiveanalysis was stated in this chapter. This study will use Shapiro-Wilk fornormality test with Spearman Correlation and Multiple Linear Regression used indetermining the significance between the independent variable and the dependentvariable..
Besides that, Statistical Package for the Social Sciences (SPSS) andE-views had been chosen as the instruments to progress and run the data. Thegenerated result will be interpreted and discussed in the following chapter.