Islamic vs. Conventional Banking

This assignment delves into a comparative analysis of Islamic and conventional banking systems. It examines key aspects such as profitability, governance, risk management, and the overall performance of both systems. The research requires students to analyze empirical studies, academic articles, and financial reports to draw conclusions about the strengths and weaknesses of each system.

Running Head: DISSERTATION PROPOSAL
Dissertation Proposal

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DISSERTATION PROPOSAL
Table of Contents
Chapter 1: Introduction, Aims and Objectives.......................................................................................3
Research title.....................................................................................................................................3
Chapter 2: Literature Review.................................................................................................................5
To explore rules and regulation of Islamic and conventional banking: in context of Al-Rayan bank
and HSBC..........................................................................................................................................5
To identify key challenges faced by Islamic and conventional banking relating to legislation..........5
To recommend strategies in order to eliminate issues faced by Islamic banks which assist in making
them compatible with conventional banks.........................................................................................6
Chapter 3: Proposed methods of research..............................................................................................7
Research Approach............................................................................................................................8
3.2 Research Strategy........................................................................................................................9
3.3 Data Collection methods............................................................................................................10
a) Method for gaining access to sites, data and or informants......................................................10
b) Sampling Procedure................................................................................................................10
3.4 Data analysis method.................................................................................................................11
3.5 Anticipated Challenges and Limitations....................................................................................12
a) Research Limitations...............................................................................................................12
3.6 Ethical and Professional Issues..................................................................................................12
4. Research Timetable.........................................................................................................................13
Table 1: Research plan....................................................................................................................13
References...........................................................................................................................................14

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Chapter 1: Introduction, Aims and Objectives
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).
Research title
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:
 To explore rules and regulation of Islamic and conventional banking: in context of Al-
Rayan bank and HSBC

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DISSERTATION PROPOSAL
 To identify key challenges faced by Islamic and conventional banking relating to
legislation
 To recommend strategies in order to eliminate the issues faced by Islamic banks
which assist in making them compatible with conventional banks
Research question
 What are the rules and regulations used by Islamic and conventional banking in their
process?
 What are challenges of Islamic and conventional banks related to the legislation?
 What are the strategies in order to eliminate the issues of Islamic banks?

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DISSERTATION PROPOSAL
Chapter 2: Literature Review
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

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DISSERTATION PROPOSAL
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.

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Chapter 3: Proposed methods of research
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

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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).
Research Approach
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

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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).
3.2 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

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DISSERTATION PROPOSAL
assist the research scholar to attain the research objectives in the specified time frame
(Mackey and Gass, 2015).
3.3 Data Collection methods
a) 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).
b) 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-

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DISSERTATION PROPOSAL
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.
3.4 Data analysis method
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).

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DISSERTATION PROPOSAL
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).
3.5 Anticipated Challenges and Limitations
a) 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).
3.6 Ethical and Professional Issues
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

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supportive to create a favorable relationship between the research participants and research
scholar.
4. Research Timetable
Table 1: Research plan
Research acts Number of weeks
1 2 3 4 5 6 7 8 9 10
Research dilemma determination
Determination of research objectives and aims
Identify the data collection method
Design of questionnaire
Sampling method for sample size section
Data analysis
Final draft and report writing
Final submission
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.

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References
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products and the Islamic theory of lawful profit’, International Journal of Islamic and Middle
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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.
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Flick, U. (2015) Introducing research methodology: A beginner's guide to doing a research
project. USA: Sage.
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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.

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Gheeraert, L. (2014) ‘Does Islamic finance spur banking sector development?’, Journal of
economic behavior and organization, 103, S4-S20.
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Islamic and conventional banks in GCC countries’, Future Business Journal, 3(2), pp. 172-
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Taylor, S. J., Bogdan, R., and DeVault, M. (2015) Introduction to qualitative research
methods: A guidebook and resource. USA: John Wiley and Sons.

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Zins, A., and Weill, L. (2017) Islamic banking and risk: ‘The impact of Basel II’, Economic
Modelling, 64, pp. 626-637.