Tuesday, June 4, 2019
Research Paradigms and Concepts of Ontology and Epistemology
Research Paradigms and Concepts of Ontology and EpistemologyChapter 2 Research MethodologyThis chapter of our thesis lead illustrate the systemology that was undertaken in order to conduct our seek. This chapter is hike divided into twain sections. In 1st section of the chapter we will wrangle theoretical modeological analysis. It includes explore philosophy, seek advance shot and enquiry strategy. In 2nd section of the chapter we will discuss buy the farming methodology. It includes choice of the subject, preconception, perspective, belles-lettres, info question and sampling of methods. Here we will non only describe the methods that atomic add up 18 opted during our look into process notwithstanding similarly try to explain and justify why they argon preferred over the alternatives methods that are available.2.1 Theoretical methodology2.1.1 Research philosophyDuring a business interrogation it is imperative to think closely contrastive explore paradigms and theme of ontology and epistemology. These look for paradigms re flummox a parameter that controls the research carry out from research public figure to the conclusion and recommendations of the research. Thats why it is of great signifi buttocksce to understand these features in order to move in harmonious manner and actions take towards unambiguous investigation and making sure that researcher crooknesses are minimized (Flower, 2009, p 1).2.1.1.1 Epistemological ChoiceEpistemological issue concerns with the question of what or should be regarded as acceptable noesis in a discipline.(Bryman Bell, 2007, p. 16). Eriksson and Kovalainen describe epistemology as what cognition is and what are the sources and limits of knowledge (Eriksson and Kovalainen, 2008). It is important that the given piece of knowledge is canvass in the relation back manner. Epistemology is further divided into positivism, interpretivism and realism. logical positivismPositivism is the resultant of r esearch in natural science where a system is tested that is derived from a prevailing theory. Positivism emphasizes that true and reliable knowledge is that which stands upon logic, practical experience and affirmative au pasttication. The purpose of theory is to generate hypotheses that can be tested and that will be thereby onlyow explanations of laws to be assessed(Bryman Bell, 2007, p. 16). Positivism is generally linked with vicenary research where one selects a theory and piece of knowledge, then collects information and interprets it and hence proves the guessing to be true or not. The researcher coverking to adopt a decided positivist attitude exercises choice of the register, the research object glass to pursue and the data to be collected (Saunders et al., 2009, p. 114). It is believed that the positivist researcher will use unified methodology with the aim of producing replicability.InterpretivismInterpretivism is a stance contrary to positivism and is also kn ow as anti-positivism. Philosophers of social science believe that subject matter of a research in a social science that is undertaken upon some(a) individuals and personals or institutions are different from that of the natural science (Bryman Bell, 2007, p. 17). According to Saunders et al., (2009) phenomenology and symbolic moveionism are the two intellectual traditions that interpretivism comes from. Phenomenology refers to way in which we as humans crystalize sense of the homo around us. In symbolic interactionism we are in continual process of interpreting the social world around us in that we interpret the actions of others with whom we interact and this interpretation leads adjustment of our own meaning and actions (Saunders et al., 2009, p. 116).RealismRealism is another branch of epistemology that is similar in nature to positivism. According to this philosophic position humans does exist independently of the human realization. on that point are two main attributes of realism. Bryman Bell, 2007 named them empirical realism and faultfinding realism. Whereas Saunders et al., 2009 name them as direct realism and critical realism. Main difference among critical and direct realism is that critical realism claims that our knowledge is developed in two phases. Firts there is an object and substance we fall upon and experience trough our senses and in second phase process goes on after the senses receive the sensations. Whereas direct realism claims first phase is enough and what we see is what we get (Saunders et al., 2009, p. 117).In epistemic consideration of our research we take the positivist position. The reason slow plectron of positivist stance is what we studied in the literature we develop a hypothesis on the basis of prevailing theories and in our empirical findings we will test this hypothesis for acceptation or rejection. What we are sledding to guide is the usefulness of banks internal evaluation model (CAMELS) with admiration to outside credit grade models such as PACRA and Moodys. Another reason behind pickax of this stance is the use of junior-grade data and positivism is usually linked with researches that are quantitative in nature such as statistical tools and figures.2.1.1.2 OntologyThis tug of the research paradigm deals with the nature of social entities and realities. This raises the question of whether social entities can and should be considered objective entities that have reality external to the social factors, or whether they can and should be considered social construction build up from the perception and actions of the social actors (Bryman Bell, 2007, p. 17). Above we discussed two aspects of ontology, are known as objectivism and constructivism respectively.In ontological consideration, our research thesis is objectivist in nature. For empirical finding of our thesis we will use statistical tools such as financial ratios. The result provided by these ratios will be rated on the scal e of 1 to 5 sourced on the issued ranking system of CAMELS rating model. Then we will compare the result provided by CAMELS rating model with the issued ratings of PACRA rating agency of the same distributor point of time. So it is obvious from our choice of ontological consideration that the research will be free from all sort of biasness of the authors.2.1.2 Research ApproachAt this stage of a research one has to decide on the basis of chosen theory thats is either learnt or contained in the literature that he/she will follow a deductive coming or inductive approach. In deductive approach one develops a hypothesis from the theory and devises research strategy to test the hypothesis to accept or reject it. Whereas in inductive approach one has to collect data, analyze it and develop theory based on the result of analyzed data (Saunders et al., 2009, p. 124).2.1.2.1 Deductive approachThis approach represents characteristics of the correlation among theory and research. On the b asis of gained knowledge that may be inferred from the theoretical reflection about the research field, one assumes a hypothesis that will be observed in empirical psychodepth psychology (Bryman Bell, 2007, p. 14).According to Robson (2002, cited in Saunders et al., 2009, p. 124) deductive research goes through 5 amounts. First develop a hypothesis from a theory, second express the hypothesis in operational terms, third is hypothesis testing, fourth analyzes the particular result of the inquiry and in the fifth and final stage verifies or modifies the theory on base of your findings. Collection of quantitative data is an important characteristic of deductive approach although it may use soft data some times. In deductive approach highly structured methodology is implemented to assist replication to guarantee reliability. Generalization is another important characteristic of deductive approach (Saunders et al., 2009, p. 124-125).2.1.2.1 Inductive approachIn inductive approach the ory is developed on the basis of research observations. Researchers in inductive approach are predominantly concerned with the events that are actually taking place and deal with the small taste as against the large number in deductive approach. Researchers close equivalently use qualitative data in this approach. Structure of the research in inductive approach is more flexible as less generalized as compared to highly structured methodology and generalized characteristics of deductive approach (Saunders et al., 2009, p. 126-127).In our research we will use deductive approach and not the inductive approach. The simple reason behind selection of this approach is correlation among the theory and hypothesis. On the basis of studied literature and constructed theoretical frame work we have derived a hypothesis. Our thesis findings will lead us towards the acceptation or rejection of hypothesis which is superiority of banks internal evaluation models with respect to external rating a gencies models. As we know that deductive approach is highly structured methodology so our thesis will follow the predefined structure..2.1.3 Research strategyAccording to Bryman Bell, 2007 by research strategy, we simply mean a general preference to the conduct of business research. Two separate clusters of research strategy are qualitative and quantitative research. Both quantitative and qualitative researches are different from each other not only on the basis of quantification and measurement of the result but also on the basis of epistemological and ontological foundations (Bryman Bell, 2007, p. 28).2.1.3.1 Quantitative researchQuantitative research is mostly used in deductive approach where the aim of the ascertain is to test a hypothesis for proving a theory. In quantitative research analysis of the result is mostly in numbers and quantify. Another characteristic of quantitative research is size of the test is very large. Quantitative research is subject to a very low le vel of biasness in the interpretation from the researchers as statistical tools are used for analysis of the results. Quantitative research is more generalizable. Quantitative research is more positivist in nature when it comes to epistemological orientation. While in ontological orientation quantitative research is objectivist in nature (Bryman Bell, 2007, p. 28). According to Bryman Bell, 2007 quantitative research have 11 steps. Steps mentioned by them in their book Business research methodsare as follow 1st Theory, 2nd Hypothesis, 3rd Research design, 4th Devise measures of concepts, 5th select research site, 6th select research subject / respondent, seventh administer research instruments / collect data, 8th Process data, 9th Analyze data, 10th finding and conclusion and 11th is write up findings and conclusions.Fig 2.2 Based on the idea from Bryman Bell, 2007 the process of quantitative research.2.1.3.2 Qualitative researchQualitative research is the contrast of the quantit ative research in almost every(prenominal) aspect. Qualitative method is mostly used in inductive research where emphasis is on the generation of a theory that is based upon research observation. Analysis of the qualitative research is based upon the words and statements and mostly in textual form. Qualitative research is more interpretivist in nature when it comes to epistemological orientation. While in ontological orientation qualitative research is constructivist in nature. Size of the sample in qualitative research is small. Researcher in the qualitative research requires special skills for the interpretations of the results. Contrary to quantitative research, qualitative research is less generalizable and very low level of replicability. (Bryman Bell, 2007, p. 28). Below is differentiation chart of quantitative and qualitative research based on different research aspects.Research AspectQuantitative ResearchQualitative ResearchScientific MethodDeductiveInductiveNature of real ityObjectivistConstructivistResearch objectiveDescription, explanation and predictionDescription, exploratory and discoveryNature of observationNarrow angle focus lensWide angle focus lens roll of dataQuantitative dataQualitative dataSample SizeLarge sampleSmall sampleData analysisStatistical tools await for patterns, themes and holistic featuresResultsGeneral findingsParticular findingsConclusionStatistical reportNarrative reportSelf made chart based on the studied books and articles.In our research thesis we will use quantitative research strategy instead of qualitative research. woof of quantitative research strategy is based upon number of arguments other than presentation of result in numerics and figures. As in epistemology consideration our research is positivist in nature and in ontological consideration we has opted the stance of objectivist, this is another reason for our selection of quantitative research. Our research is basically concerned with numbers and use of stati stical tools to measure and analyze these numbers and figures. We have selected deductive approach which is usually related with quantitative research strategy and we argued about its selection in previous section. So keeping in mind our research question and objective we selected this strategy that will be appropriate and will guide us though out our research process.2.1.4 Nature of ResearchThe family relationship between events or factors is often described, examine, and explain by the researchers. The research can either be descriptive, explanatory, exploratory or predictive nature. Nature of the research all in all depends on research question. In descriptive research the researcher tries to identify or describe the events. For exemplification in descriptive research if the question is What is the present or past state of events? for this the researcher selects the representative sampling of the people. Whereas explanatory research is for events to be explain by the researcher and look for fundamental reasons. informative research is also referred to interpretive research. For example the researcher conducts explanatory research if they ask Why have these events happened in the manner they did? Or What are the implications of these events occurring as they have? (Rubin et al, 2010, 198). explorative research is a type of research when researcher is unable to find any or very few prior studies about the research question. Exploratory study aspire researcher to look for the ideas, Patterns, or hypothesis, instead of testing or verifying a theory. In exploratory research typical techniques are used here researcher comprises observation, case studies, and previous studies. In this type of research the researcher uses both qualitative and quantitative data. Exploratory research totally focuses on achieving the imminent and acquaintance with the subject area to examine at later stage (Collis Hussey, 2009, p. 6). Predictive research advances one step further t han explanatory research. Aim of the study is to create justification for what is happening in particular circumstances. Predictive researchis concerned with the anticipation of a possibility of some occurrence. Aim of predictive research is to generalize the investigation by forecasting some phenomena on the foundation of hypothesized, general relationships. Hence we can hypothesise that outcome provided by a predictive research in a particular situation can be applicable to some other problems of similar nature, provided that the beginning is valid (Collis Hussey, 2009, p. 6).Nature of our research is exploratory in nature as we didnt find any previous research work on the same research problem. There are some articles and thesis that reflects the usage of camels rating model framework on any particular or limited number of banks. As in our research we will try to investigate the superiority of banks internal rating models with respect to external credit rating agencies, we fou nd no research work in this particular field. Our research will open a new window of research in the field of banking rating systems.2.1.5 Time thought of researchTime horizon of research plays a very significant role for both authors of the research and readers of the research. From researchers point of view it is important to understand that what type and lineament of data they are collecting for the research and how easily it can be collected. Some time it is very difficult and time consuming to collect the data spread over long cessation of time. From readers point of view time horizon of the research is of great magnificence as it shows credibility and quality of the research observations. According to Sunders et al. 2009 time horizon of the research can be divided into two types cross-section(a) research and longitudinal research (Saunders et al.2009, p. 155).2.1.5.1 Longitudinal studyLongitudinal study is such type of a research in which same sample of population is obser ved over a longer period of time. Longitudinal research is a type of observational research in which the subjects are observed without manipulations and hence can be argued that it has less potential to let out cause and effects relationships of variables as do by the experimental studies. In longitudinal research, researchers have the opportunity to observe changes and improvement that took place over the period of time (Lindborg Ohlsson, 2009, p. 15).2.1.5.2 Cross-sectional studyCross-sectional research is a study of sample observations or of a population in which a researcher makes her/his study and get result for a short period of time or on a single occasion. From the population researcher takes sample and within that sample he/she distribute the variables, and sometime the variables which are predict and designated on the bases of reasonable information which he/she gets from other sources. Descriptive and exploratory studies are frequently cross-sectional. For example a sin gle survey of a country to describe the population of the specific country at a given time. Cross-sectional study is also very close to explanatory studies. A researcher conducts a survey on national base to examine the nation problem at a given time (Hulley et al, 2007, p.109).Keeping in mind supra arguments about longitudinal and cross-sectional studies, we can easily say that our research is a cross-sectional study. As in our thesis we will manipulate one year annual financial reports for the year ended on 31st Dec 2010, and all 17 banks belongs from Pakistan. It would be of great significance to use annual reports of more than only year but the problem is at the same time we deficiency to collect published credit ratings of banks for the same year and that was very difficult to collets as most banks do not keep their old records of ratings. As we discussed above that cross-sectional studies are mostly exploratory or descriptive in nature and our research is also exploratory in nature.2.2 Practical MethodologySelection of the research topicBoth authors of the thesis come from Islamic Republic of Pakistan where banking industry is on the boom despite of the general economic turmoil. As faraway as our educational background is concerned, one of the authors has done of BBA (Hons) with major in Finance and second author has done MBA with major in Finance, in which we studied several courses about banking and finance. This was the point where our interest was developed in the field of banking. Now being the students of Master in Finance, keeping in view our approaching professional careers in the field of banking and finance, we choose this research topic. As our research is focusing on CAMELS rating model that takes into account 6 important atom of banking industry, it will give us better ground and knowledge about performance of banking industry particularly in Pakistan. Another reason behind selection of this research topic is our personal curiosity abou t the ratings of the banks particularly in Pakistan.PreconceptionPreconception about the research topic is quite important as it develops interest of the researcher and involves him neutrally in the topic. Both authors of the thesis worked as an internee in conventional bank in Pakistan after completion of their studies and have gained some practical experience of banking. In our practical experiences we observed that not all of above but some of these factors that are addressed in ratings models are of great importance for better performance of the banks.PerspectivePerspective provides point of view about the chosen field of study from several angles with different aspects, providing a pool of options from which the most suitable one is to be selected while keeping in mind your research question and purpose. Our thesis is based upon the superiority of CAMELS rating model results with respect to external rating agencies we will be looking at it from internal point of view of the ba nks and their regulatory authorities. But it readers can also be external users such as rating agencies and will be useful for them as well.Data Collection MethodFor any type of research study data collection is an important aspect. Data is the source from where researchers can get relevant information to answer the research questions. To gather applicable information researchers use primary and secondhand data as a sources. Primary data is collected or perceived straight from the first time experience. Or we can say that data collected for the first time particularly for this research problem. The sources contained in primary data are questionnaires, observations, social surveys, experiments and interviews. On the other hand secondary data is published and the data collected by someone else in the past. We use the published and collected data by someone else to solve our problems but the problem might be different from others. The sources from which we can collect secondary data a re articles, books, journals, and web-based data (Ghauri Gronhaug, 2005, p. 91-102).Theoretical framework of our study that is based upon secondary data, we read all relevant literature to our study that gave us full knowledge and beneficial understanding of our research questions. On the basis of this further study should be conducted. Findings of our research are totally dependent upon secondary. Findings of our research are complex in nature but our secondary data will protagonist us to achieve this objective. The electronic search engine is the main source in our study we used Ume University electronic library, Google search, electronic books we also use printed materials like books.Literature studiedAccess to the relevant and authentic literature for a researcher is of great importance. It provides basis for the researcher to build upon the theoretical frame work of a chosen field of study and research design (Brayman Bell, 2007, p. 94). In the beginning of our research we s tudied some articles regarding the financial crises caused by the collapse of leading financial institutions of that time and banking industry of Pakistan afterwards we collected some articles and books through university archives database and internet search about research methods to construct research methodology chapter of our thesis and to guide us throughout our thesis. Articles are mostly collected from journals of Banking and Finance, journal of international banking regulation and the review of financial studies accessed through university provided logins on its database. It is a difficult task to gather relevant articles as one comes across so many articles that look relevant but they are not in real. We also studied some online books that are available via different websites such as www.book.google.com. We also gathered some material such as brochures and working(a) papers about the procedures and methods used for ratings of financial institutions form rating agencies web sites including SPs, PACRA, and regulatory authorities such as Basel and SBoP. The collected materials provide us better understanding and capabilities to work in the field rating systems.SamplingSample is a subset of whole population that is selected to represent the population in any specific research to perform statistical inferences and to make judgments about the whole population on the basis of selected sample. For researchers it is very important to select appropriate sample from population to make inferences. There are two primary reasons why researchers select a sample for their research instead of studying the whole population, 1st it is very dearly-won and 2nd is the time limitation for a research. According to Bryman Bell, sample is a fragment of population chosen for examination or research. Talking in a broader sense there are basically two types of sampling approaches Probability and non probability approach (Bryman Bell, 2007, p. 182).Probability sampling is an ap proach in which each and every unit of population has equal chance of being selected in the sample and their probability of selection is greater than 0. This is the most suitable approach that eliminates bias in sample selection and reduces sampling error. Simple random sampling, systematic or interval random sampling, stratified sampling and cluster sampling are some types of probability sampling (Brayman Bell, 2007, p. 182). Whereas on the other side non probability sampling is an approach in which probability of selection of elements is not known or some elements of the population have no chance to be selected as a sample. Referral (Snow ball) sample, quota sample, criteria sample, homogeneous sample, critical sample and matched sample are the types of non-probability sampling.Referral sampling method is also knows as snow ball sampling. This type of sampling procedure is used when it is difficult to find subjects or samples for the research. In this type of a research sample we cannot identify our sample in advance and important consideration is to find initial subjects and informants. From initial subjects we can ask to identify further subjects for our research sample and the process continues to go on like a snow ball (Swisher, 2010, p.1). In Quota samplingpopulation is first divided into subgroups based on some criteria and then subjects are selected as a sample from each group. Quota sampling can be further divided in two sub groups known as proportional and non proportional quota sampling. In proportional quota sampling, sample of every sub group of population is represented by its proportional weight age of the population. Where as in non proportional quota sampling a limit of minimum numbers of sample subjects are set as a standard and are not necessary to represent its proportion in the population. It only has to justify that the chosen sample is able enough to represent a small group in a population. Heterogeneity sampling is a procedure when we select sample for our research that will represent every group of thought or variables of the population, on the other hand Homogeneous sampling is a procedure of sampling when we want to study about some specific factors or variables and their effect on the outcome that represent the population (Trochin, William, 2006). Criteria sampling is a procedure to select sample from the population that is based upon some specified and thoughtful criteria. Criteria set by the researchers fulfilled by any subject that represents the population should be include in the sample and any subject fail to meet the criteria is not included in sample that will represent the population (Swisher, 2010, p.4).To make a sample for our research we have selected criteria sampling method. As we are working on the CAMELS rating model and its replicability to the results of the external credit rating agencies published ratings, so for that we have to work upon banks annual financial reports. Our criteria for the banks to be included as a sample is the availability of their audited annual financial reports for the year ended 31st Dec 2010. Total population of number of banks operating in Pakistan is 38. Out of 38 banks 5 banks are Islamic commercial banks and operating on Sharia standards that is to great extent different from commercial banks system. CAMELS rating model is designed for conventional banks and its applicability on Islamic banks is argued by several authors but contradicted by others. So for this particular reason we did not include Islamic banks in our sample. There are 6 extraneous banks operating with in Pakistan as subsidiaries of other multinational banks, and these banks prepare their annual financial reports and submit it in their Head offices that further add up in their consolidate annul reports. So there were some complications in collection of their annual reports and its interpretation. Because of this reason we did not include these foreign banks as our sample for our thesis. Further on searching for the annual audited financial reports of the banks, we find out that till date 10 banks did not published or announced their annual financial reports. As these banks did not meet with the predefined criteria of availability of their annual financial reports, they are also excluded and are not part of our sample. At the end we are left behind with 17 banks and their audited annual financial reports, so our sample includes 17 commercial banks from Pakistan.
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