Conventional & Islamic Banking Contribution to Bangladesh Development

This research proposal investigates the contribution of Islamic and conventional banking sectors to the sustainable development of Bangladesh. It aims to analyze the relative benefits and shortcomings of both banking systems in promoting sustainable development, focusing on infrastructure, education, and agriculture. The study employs a qualitative research technique, including interviews with bank managers, and utilizes a positivism research philosophy with a deductive research approach. By comparing the two banking models, the research seeks to develop recommendations for best practices to foster sustainable development in Bangladesh, considering the country's economic context and the roles of both Islamic and conventional banking in its growth.

RESEARCH PROPOSAL

Table of Contents
INTRODUCTION...........................................................................................................................1
Research Title.........................................................................................................................1
Research Aim and Objective.................................................................................................1
LITERATURE REVIEW................................................................................................................1
Research Methodology....................................................................................................................5
REFERENCES................................................................................................................................7

INTRODUCTION
Conventional banking and Islamic banking is very essential for improving the
sustainable development and growth in the country. In the conventional banking, money is a
commodity besides medium of exchange and store the value. ON the other hand islamic
banking is that banking under which money is not an commodity though it is used as a medium
of exchange and store the value. In the present research proposal, the major objective of
investigator is to analyse the contribution of Islamic banking and conventional banking in
promoting growth and sustainable development of Bangladesh. With assistance of this study,
researcher can able to investigate the importance of islamic banking and conventional banking
and its contribution in the economic development of country. This study assist to the scholar in
analyse the entire financial condition and economic performance of Bangladesh. The
contribution of the Islamic and conventional banking in the country development and sustainable
growth has been discussed in this report.
Research Title
The contribution of banking sector in promoting sustainable development of Bangladesh: A
comparative analysis between conventional and Islamic bank.
Research Aim and Objective
To analyse the contribution of conventional and Islamic banking sector in promoting sustainable
development of Bangladesh.
To obtain an understanding of the relative benefit and shortcoming of Conventional and Islamic
banking for sustainable development of Bangladesh.
Develop an understanding of sustainable development in Conventional and Islamic banking in
Bangladesh.
To understand the contribution of conventional and Islamic banking sectors in promoting,
sustainable,development with respect of infrastructure,education, agricultural condition
within Bangladesh.
To Conduct a comparative analysis of Islamic and Conventional banking with respect to the
contribution towards the sustainable development in Bangladesh.
To develop a series of recommendations on the best practices (Conventional vs Islamic models )
for the sustainable development in Bangladesh.
1

LITERATURE REVIEW
Meaning of sustainable development within the country by banking sector
In the view of Abedifar and et.al., (2015) sustainable development of the country refers
to the growth of entire country. It represents its financial and economic effectiveness. While any
country have effective sustainable development then it can be said that there is effective
financial, economic and environmental condition. As per the view of Arshad, Yusoff and Tahir,
(2016) Banking sector within the country can improve the productivity, rate of investment rate,
reducing of the transaction cost of intermediation, ability to affect the share of saving the
economy etc. There is a direct relationship of the short and long run equilibrium in the banking
sector. In order to improve the sustainable development of country, short and long term
equilibrium relationship between bank is very important. In order to improve country's
sustainability, bank is very significant aspect as it present the financial performance of country.
Every country developed and improved by its population effectiveness and efficiency. If there is
live rich people then there picture represent their positive environment. In addition to this, in
order to improve the sustainable development of the country, banking sector can contribute in
various fields like infrastructure, agriculture, employment etc. In order to improve the
sustainable development in the country, conventional banking plays a very crucial role by which
charging interest on capital, time value is basis and it uses money as a commodity which lead to
the inflation. In this banking, if organisation suffers from the losses then interest will be charged
and it is not based on the profit and loss. As per this banking, money is a medium of exchange
which can be sold at the higher rate as compare to its face value.
Contribution of conventional banking and Islamic banking in sustaibale development of
country
According to the view of Arshad, Yusoff and Tahir, (2016) in the development of
country bank plays a very crucial role by which financial transaction can systematically conduct
within the country. If there is no bank then it may very difficult to carry out financial activities
and transaction among the country. The performance of bank can reflect the country economic
condition because if people have strong financial condition then they carry more financial
transaction. With assistance of effective banking sector, country's infrastructure condition and
agriculture condition improve because if banking have effective performance than its positively
contributes in the infrastructure, agriculture, employment rate. Banking sector helps in
2

improving the employment rate because due to the banking, individual of country can able to get
the job. In addition to this, with assistance of banking, agriculture condition has also improved in
the Bangladesh because bank also provides some loan and kinds of insurance related to the
agriculture work. In the education and employment sector, bank provides education loan through
which people can enhance their education. This will affect the employment condition within the
Bangladesh. In the context of Bangladesh, it is the 46th largest country in the world which have
market based economy and which have 33rd biggest country in the context of purchasing power.
It is second fastest growing economy in the 2016 and its financial condition is good. With help
of Islamic banking and conventional banking country's sustainable development can easily
possible. In this respect, conventional bank have effective contribution as compare to the Islamic
bank in the Bangladesh. The banking sector has faced various ups and down in the Bangladesh
as there is financial condition has been continuously changed. Islamic banking and conventional
banking has effective role within the country economy by which financial performance can
determine. If country's Islamic banking and conventional banking has effectively performed and
grown then its directly positively impact on the economic performance of country. On the other
hand if Islamic banking and conventional banking performance is weak then it directly reflects
poor economic condition of the country. In the present time, commercial bank in the Bangladesh
reflect the poor health of bank. Conventional banking and Islamic banking helps to the
Bangladesh in improving infrastructure, agriculture, education and employment sector through
which country's sustainable development and growth can positively influence. These both
banking as Islamic and conventional banking can help to the country in improving their
sustainable development and growth.
In the opinion of Beck, Demirgüç-Kunt and Merrouche, (2013) there are major
difference between conventional banking and Islamic banking. As per this banking, money is a
medium of exchange which can be sold at the higher rate as compare to its face value.
Conventional banking helps to the country in sustainable development because by this charging
interest on capital, time value is basis and it uses money as a commodity which lead to the
inflation. In this banking, if organisation suffers from the losses then interest will be charged and
it is not based on the profit and loss. On the other hand in the context of Islamic banking,
country can save their financial asset and deliver high quality of banking services to the
customer in the banking sector. Demiralp and Demiralp, (2015) stated that such kind of banking
3

regulate according to the loss and profitability which gain by the banks. In this Islamic banking,
money is not thing which is used as a medium of exchange and it can not sell at higher prices.
With help of Islamic banking within the country sustainable development can easily possible. In
order to grow the business and develop economy, conventional bank plays a very crucial role
because it is a kind of profit making organisations which main motive is to develop the
profitability and which is not based on any religious principles. On the other hand in the context
of Islamic bank, it is promoted the Islamic principles. Thus, from the above collected data about
the Islamic banking and conventional banking in the Bangladesh it can be analysed that banking
sector is one of the most important sector in the Bangladesh by which sustainable growth and
development can improve within the country. Thus, it can be said that in order to improve the
sustainable development of country Islamic banking and conventional banking plays a very
crucial role. In the opinion of Beck, Demirgüç-Kunt and Merrouche, (2013) It is very important
for the bank to make effective banking performance and activities by which its economic
condition can positively influence. In the Bangladesh, there is very significant role of the Islamic
and conventional bank with respect of economic and sustainable growth and development. These
two banking can assist in improving the sustainable development of the country as these banking
assist in providing effective financial transaction and safety within the country. People can
easily improve their financial transaction with help of these two banking system.
4

Research Methodology
Research methodology plays very crucial role in the investigation by which scholar can
able to address the actual issue related to the subject. Research technique is one of the important
method in the research methodology by which data can collected and analyse for address the
appropriate solution of problem. It is divided into two methods such as qualitative and
quantitative. In this present study quantitative research technique and quantitative research
technique will apply in order to address the right solution of problem. In this methods both
theoretical aspect and statistical technique can apply for find out the solution. These methods
5
Illustration 1: Islamic banking and Conventional banking
(Source: A comparative study on Islamic banking in Bangladesh. 2017)

consider on gathering numerical data and generalizing it across the people. For attain the aim is
to analyse the contribution of conventional banking and Islamic banking in the sustainable
development in Bangladesh, scholar has conduct the interview of 5 managers of Islamic bank
and conventional bank in the Bangladesh. There are various methods of research methodology
can apply in this research study such as research philosophy, research approach, research design,
research techniques, data collection, sampling etc. In this present study, scholar will apply
qualitative research technique under which primary data collection will use. Positivism research
philosophy can apply in this study by which researcher will access the actual issue of the entire
study. On the other hand researcher will apply deductive research approach so as right objective
can attain at the right time. In addition to this, exploratory data analysis will apply so as entire
study can conducted in an impressive manner.
6

REFERENCES
Journal and Books
Abedifar, P. and et.al., 2015. Islamic banking and finance: recent empirical literature and
directions for future research. Journal of Economic Surveys. 29(4). pp.637-670.
Arshad, M. U., Yusoff, M. E. and Tahir, M. S., 2016. Issues in Transformation from
Conventional Banking to Islamic Banking. International Journal of Economics and
Financial Issues. 6(3S) pp.220-224.
Beck, T., Demirgüç-Kunt, A. and Merrouche, O., 2013. Islamic vs. conventional banking:
Business model, efficiency and stability. Journal of Banking & Finance. 37(2). pp. 433-
447.
Demiralp, S. and Demiralp, S., 2015. The rational Islamic actor? Evidence from Islamic
banking. New Perspectives on Turkey. 52. pp.3-27.
Demiralp, S. and Demiralp, S., 2015. The rational Islamic actor? Evidence from Islamic
banking. New Perspectives on Turkey. 52(12). pp. 3-27.
Ferhi, A. and Chkoundali, R., 2015. Credit Risk and Efficiency: Comparative Study between
Islamic and Conventional Banks during the Current Crises.Journal of Behavioural
Economics, Finance, Entrepreneurship, Accounting and Transport. 3(1). pp. 47-56.
Iqbal, M. and Molyneux, P., 2016. Thirty years of Islamic banking: History, performance and
prospects. Springer.
Lebdaoui, H. and Wild, J., 2016. Islamic Banking and Financial Development.Review of Middle
East Economics and Finance. 12(2). pp. 201-224.
Morrison, S., 2015. Islamic Banking and Financial Crisis: Reputation, Stability and Risks Edited
by Habib Ahmed, Mehmet Asutay and Rodney Wilson. Journal of Islamic Studies. 26(1).
pp. 103-107.
Samad, A., 2016. Are Islamic Banks' Non-bank Deposits Shock Resistant? A Comparison with
Conventional Banks: Evidence from Bahrain. Journal of Applied Finance and
Banking. 6(5). pp. 107-119.
7

Online
A comparative study on Islamic banking in Bangladesh. 2017.[Online]. Available
through:<https://www.slideshare.net/ShahinuzzamanShahin/a-comparative-study-on-
islamic-banking-in-bangladesh>.[Accessed on the 14 September 2017]
8