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The methodology of any research encompasses the approach applied by the expert or specialist in their accomplishment of a given research project. In the work of Bryman (2008), the term ‘methodology’ was described as the practices and techniques in the collection, processing, manipulation and construal of information whereby the information is then applied in testing

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ideas and theories. A research methodology is a description of the framework of methods applied to data gathering, analysis, and presentation.

Research methodologies come in two types: quantitative and qualitative. The former reaches conclusions using numerical data such as by testing the relationship among independent and dependent variables. It requires data to be collected in order to allow for the quantification and statistical treatment of information. This will support or disprove alternate knowledge statements. The quantitative methodology has the primary purpose of explaining and examining a topic via the correlation of many variables (Creswell, 2003). Conversely, qualitative research focuses on words rather than quantification of data gathered (Bryman, 2016). Accordingly, Creswell and Clark (2007) explained qualitative methodology as comprising a set of research techniques for the purpose of interpreting a phenomenon. This section follows a quantitative research design, as the purpose of this research is to describe and evaluate the present framework of asset and liability management in Jordanian commercial banks. It also attempts to understand the risk-measurement tools applied.

3.5.1 Research Design

Bryman (2016) described the research design in providing structure for data gathering and analysis. Through its provision of the framework, the design of research functions as guidance all through the process of research from start to finish, enabling the completion of the work required. In conducting social research, its design should be determined first prior to data gathering and analysis.

Research design is classable in many ways and the classification is in accordance with the objective of the criteria of classification itself. In this regard, explanatory, descriptive, and

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exploratory research are the three most common classes of research. Each is described as follows:

Explanatory research is the manner in which different independent variables are manipulated to ascertain how a dependent variable is impacted within an environment that is fairly controlled. This method looks into the relationships of cause and effect that occur among variables. Nonetheless, there are shortcomings of explanatory research such as high cost and administrative difficulties (Creswell & Plano Clark, 2007).

Descriptive research is mainly useful for a researcher attempting to illustrate something associated with characteristics, functions, or any phenomena. This type of research is performed to illustrate the presence of something. Utilizing this research, a researcher employs events of the past to clarify present discernible facts. This research is characterised by explicit hypotheses, which in this instance were constructed earlier. Hence, according to Bryman (2008), the research design for descriptive research appears to be more structured and comprises many planning methodologies.

Exploratory research offers comprehension of the issue that the researcher is addressing. This type of research assists the researcher in resolving an issue which has not yet been extensively researched. Therefore, the qualitative method offers an avenue for interpretative clarifications (Creswell & Plano Clark, 2007).

Taking into account the association between these research design types, it is not so simple for a researcher to select a research approach that is deemed the best fit. It is crucial that the design chosen is applicable to the scrutinised problem while the procedure of carrying out the research is parsimoniously practicable and realistically within reach. This implies the significant impact

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of the study’s nature and the accessible resources on the research design. The framework applied in this study includes the characteristic of descriptive research designs. Furthermore, the technique of survey is used in this study in order to understand the process of asset and liability management as well as the techniques and tools used to manage and mitigate types of risk in Jordanian commercial banks. As such, the researcher could explore the issue in question using the viewpoints of professionals in the industry. This chapter is descriptive, generated from the knowledge and findings of past works, as highlighted in the reviewed literature. Accordingly, this study has opted for the quantitative design.

3.5.2 Research Strategy

A research strategy is also a crucial research aspect and is associated with the manner in which the linkage between theory and empirical data can be established. In social research, the purpose of a research strategy is generally to link theory with empirical data, as can be seen in the social domain (Bryman, 2016). In social research, the two primary strategies of research employed are the deductive and inductive approaches. The deductive approach is concerned with developing a hypotheses based on a theory, and then drawing up the strategy of research to test those hypotheses (Wilson, 2014).

In addition, the researcher relies on what is known pertaining to a given domain as well as to the theoretical considerations regarding the domain, and they work to infer hypotheses to be test in empirically (Bryman, 2016). In deductive approach, as a starting point the researcher begins from thinking up a theory regarding the topic of study. They then narrow down into more specific hypotheses, which can be tested, and then these are narrowed down even further when collecting the observations to address the hypotheses. The researcher moves from the top down, hence this is informally known as the top-down approach. These ways lead the researcher to be able to test their hypotheses and they can approve or reject their hypotheses

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accordingly (Creswell, 2003; Lewis, et al., 2012). Meanwhile, the use of the inductive approach begins with from precise observations or findings to a wider generalisation or theory. Inductive reasoning works the other way round from deductive approach, and moves from specific observations or findings to broader generalizations and theory. Informally, call this a "bottom up" approach. The researcher begins with certain observations or arguments, followed by the construction of tentative hypotheses for testing, and to finish, creates a general theory (Blaikie, 2007; Johnson, 2011; Myers, 2013). This research is focused on the descriptive approach, then, using the data gathered from the field, hypotheses are created and then tested using the gathered data. Therefore, a deductive strategy is appropriate for this study.

3.5.3 Research Method

The method of research encompasses the techniques, tools, and procedures deemed necessary for data gathering, analyses, as well as interpretation of the research venture (Bryman, 2016). In Creswell (2003), the notion of research method is viewed as the practices and techniques applied in the collection, processing, manipulation and interpretation of information, which are then usable for testing ideas and theories. The literature highlighted two kinds of research methods, namely quantitative and qualitative, where the former reaches conclusions according to numerical data, while the latter focuses on words rather than numbers. Furthermore, the quantitative method has a heavy reliance on statistical significance, whereas qualitative analysis primarily applies straightforward human ruling in the interpretation and organisation of the data gathered. As such, the qualitative method encompasses an assembly of research techniques applied in the interpretation of the phenomenon (Oppenheim, 2000; Greener, 2008; Lewis, et al., 2009; Bryman, 2016).

Quantitative measurement has been viewed as having a greater level of accurateness, reliability, validity, and objectivity as opposed to qualitative measurement. The focal points of

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qualitative research are observations and words, visual portrayals, anecdotes, construal, as well as other expressive explanations. The use of qualitative approaches enables more diverse responses, and these approaches also could adapt to new changes or issues that emerge while the research is ongoing. It is somehow noted that qualitative research can consume a lot of time and money. Still, this type of research appears to be popular in numerous fields.

In this study, which is quantitative research, the questionnaire survey method has been chosen as the data-gathering tool. The survey questionnaire allows the researcher to obtain the appropriate answers to their research questions. In this regard, descriptive research is richer if it has a link to the literature review.

3.5.4 Data Collection

In the following sections, the specifics of the data collection methods are highlighted.

3.5.4.1 The Questionnaire

A tool for research comprising a sequence of questions aimed to capture information from respondents. This data collection tool has been widely used by many researchers because it can capture diverse types of primary data. These collectable data, as noted by De Vaus (2002), include data on motivation, attitude, behaviour, and on viewpoints regarding the topic under scrutiny.

The questions set for the questionnaire must address the study aims, and a questionnaire that shows its appropriateness for the research objectives and questions set by the study is an effective questionnaire. The questionnaire must demonstrate clarity and unambiguity, while also be able to stimulate participation from respondents (De Vaus, 2002; Robson, 2016). Surveys that are correctly devised and implemented can become an effective and accurate tool for the determination of information regarding a population under scrutiny. Surveys allow

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fairly fast attainment of outcomes. Furthermore, depending on sample size of a study and the methodology selected, surveys can be cost-effective to use. According to De Vaus (2002), countless advantages have been linked to survey questionnaires as opposed to other data- gathering methods.

Accordingly, the advantages of questionnaires include: standardized gathering of responses, which makes questionnaire more objective in nature; convenience to respondents in terms of completion time; quick to complete; low cost to administer; respondents are free to be honest in responding to the questions; and bigger potential coverage of respondents. Meanwhile, Oppenheim (2000) discussed the issues that have emerged with the questionnaire method as follows: possible reluctance of certain respondents to provide responses to the questions; possible superficial answers given by the respondents, particularly when the completion time is too lengthy (the researcher should thus avoid presenting too many questions in the questionnaire); respondents giving biased opinions, which could compromise the validity of all responses; lack of opportunity to rectify misunderstandings or probe or assist the respondents; possible misinterpretation of respondents of certain items; and failure of respondents to responding to the questions, which might affect the reliability and rate of response of the survey overall.

Regardless, questionnaires have proven their usefulness and effectiveness in obtaining the data associated with the perceptions and opinions of banks on a given subject. Hence, a questionnaire survey is employed in this study to obtain the primary data from Jordanian commercial banks regarding their ALM practices. In this study, this method is one of the primary methods of gathering the main data.

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3.5.4.1.1 Open- and closed-ended questions

Questions can be in the form of open-ended questions or closed questions. In particular, open- ended questions give participants freedom to respond any way they like. On the other hand, closed questions provide respondents with several answer options, of which they have to select one or more (De Vaus, 2002). Closed-ended questionnaires are simpler and faster for the respondents to respond to as they do not need to write any sentences in response. This type of questionnaire is also simpler to code. However, closed questions lack spontaneity and expressiveness. In addition, there is a possibility of bias as respondents are obliged to make a choice between several provided alternatives. Closed questions do, however, force respondents to concentrate on the options given (Oppenheim, 2000).

By contrast, there are several advantages associated with open-ended questions. This type of question stimulates respondents to provide responses according to their liking. According to Creswell (2003), open-ended questions generate information that is unobtainable through closed questions. Furthermore, open-ended questions allow respondents to provide answers based on their knowledge or level of expertise. However, as acknowledged by Oppenheim (2000), designing the coding framework and executing the coding process consumes a lot of time. For researchers, it is therefore advantageous to have only a small number of open-ended questions.

3.5.4.1.2 The characteristics of measurements

The three main levels of measurement scales, as mentioned by De Vaus (2002), are nominal scale, ordinal scale and interval/ratio scale. As explained by the author:

1 - Nominal scale is used in determining dissimilarity between categories of a variable but the categories cannot be ranked using any order. Nominal scale is useful in the measurement of

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qualitative variables. This scale generates frequency data, which are suitable for non- parametric statistical tests.

2 - Ordinal scale is applied in answers that should be ranked using categories but these categories cannot be accurately quantified in terms of how much difference there is between them.

3 – The ratio or interval scale allows for the ranking of categories. Categories that are appropriate under this scale can be quantified in terms of the differences between them. Among the commonly used are Likert scales.

In this study, the researcher used multi categories of measurements appropriate to the questions. Figure 14 shows the research methodology that adopted for this research chapter.

Figure 14: Research Methodologies

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3.5.4.1.3 Questionnaire Sample

Bryman (2016:174) stated that “a sample is the segment of population that is selected to be

investigation”. To represent an entire population, the size of sample in a study has to be adequate. The determination of sample size is dictated by the population’s homogeneity; a larger sample is necessary if a pilot study shows significant population heterogeneity, while the study is mainly aimed at generalizing the results to the population and . In addition, sampling errors portability will be less in larger sample size (Robson, 2016).

There are many sampling strategies, including cluster sampling, panel sampling, simple random sampling, stratified sampling, systematic sampling, and so forth. Each strategy has advantages as well as disadvantages. Regarding the variety of sampling methods, Robson (2011) mentioned the possibility of using them separately or together. Accordingly, there are a number of factors that generally affect the selection of methods: the nature and quality of research; the accessibility of supporting information regarding the research units; the need for accuracy and accurate measurement; the possibility of the expectation of sample analysis; and issues associated with operation and/or cost.

The banking sector in Jordan comprises 25 banks, 4 of which are Islamic banks and the rest of which (21) are commercial banks. Thirteen of the latter are domestic banks while the rest are foreign. The study will focus on commercial banks operating in Jordan as Islamic banks are subject to different regulations, policies and procedures compatible with Shariah Law. Thus, non-probability sampling20 _{is used to define the targeted population. Furthermore, the}

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researcher will try to administer the survey questionnaire to all of the conventional commercial banks in Jordan.

Table 2: The banking system in Jordan

The survey questionnaire will contain descriptive questions that are designed to measure the characteristics of balance sheet management and the strategies used in relation to the role of the ALCO committee in Jordanian commercial banks. The targeted group will be carefully selected to ensure their involvement in the study subject. Thus, the questionnaire administered to the treasury managers or CEO depends on the degree of involvement and organisational structure of the Jordanian banks.

3.5.5 Questionnaire Design

The researcher mainly constructed the questionnaire based on deductions from the literature review as well as surveys on ALM within the banking industry and central banks. The researcher also drew on Choudhry (2011), the Basel committee standards, World Bank regulations, and materials from the Financial Conduct Authority for a theoretical foundation

Type of banks No. % Notes

Total banks in Jordan 25 100%

Percentages of total population

Commercial banks 21 84%

Islamic banks 4 16%

Total sample; of which: 21 84%

Domestic commercial banks 13 61.9%

As percentages of the total sample.

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and conceptual framework for the questionnaire. In particular, Choudhry (2011) classed the conventional approaches that the majority of financial services industries are using. Apart from that, the broad practical experience that has been gained by the researcher in central and commercial banking greatly contributed to the design process of the questionnaire.

The survey questionnaire covers seven main topics, namely; (I) Asset Liability Management; (II) Asset Liability Management Committee; (III) Liquidity Risk; (IV) Interest Rate Risk; (V) Credit Risk; (VI) Market Risk; and (VII) Contingency Funding Plans and Stress Testing (see Appendix 2-2). Furthermore, Figure 15 shows the topics covered in the survey questionnaire.

Figure 15 : Questionnaire Sections

Source: Auther plot

3.5.5.1 Ethical considerations

Researchers are professionally and legally accountable to their study respondents. Following the attainment of permission from the respondents’ managers, the researcher was accountable for making sure that the respondents were clear about the survey in terms of its objectives. In

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addition, the use of formal language in the questionnaire was needed to prevent discriminatory language. Furthermore, the researcher has to assume accountability for protecting the identity and identifiable information of individual respondents from being exposed to third parties such as clients and the public without express permission from the respondents themselves. Apart from that, the researcher is obliged to remain as objective as possible when performing their analyses (Greener, 2008).

Accordingly, the researcher will avoid using offensive, discriminatory, or other unacceptable language in the formulation of the questionnaire. In addition, the researcher will seek the permission of the senior management teams in the Jordanian commercial banks in study sample in order to identify the right respondents, alleviate any inconvenience for the respondents, respect their privacy and anonymity, and ensure that an adequate level of confidentiality is maintained regarding the research data. Furthermore, the researcher will ensure the transparency and clarity of the survey objective and maintain the highest level of objectivity in research analyses. During the questionnaire’s distribution, the researcher contacted the central bank of Jordan, as it is the supervisory body for the banking sector in Jordan. They offered their help in distributing the questionnaire to all of the conventional banks in Jordan to get the feedback from the respondents.

3.5.5.2 Pilot study

This study was carried out prior to the execution of the main research study. The pilot study was to ascertain the feasibility of the research and was used to improve the research design. According to De Vaus (2002), a research questionnaire needs to be meticulously evaluated prior to final administration. A pilot test is therefore necessary owing to the fact that it brings to light any inadequacies prior to the full distribution of the document. As explained by Bryman (2016), a pilot study scrutinizes the general presentation, clarity and rationality of the

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questionnaire, particularly with respect to the depth and length of the questions. In addition, the use of a pilot study allows the researcher to determine their respondents, and to determine