Research Methodology on Mortgage-Backed Securities, Sukuks and Quantitative Easing Tapering.

Research Methodology on Mortgage-Backed Securities, Sukuks and Quantitative Easing Tapering

Table of contents
Introduction 3
Research methodology 3
Research objectives 3
Research design 4
Research philosophy 5
Research approach 6
Research method 6
Data collection 7
Reliability and validity 8
Limitations of the research methods 9
Conclusion 10
Reference list 11

Introduction
Mortgage-Backed Securities (MBS) and Sukuks highly represent the bond market. While MBS is an asset backed security generally issued to the general public with regular principal and interest payment flows, Sukuks are generally referred to “Sharia compliant bonds” that are recorded in a portfolio of equal valued securities held by several individuals. On the other hand, Quantitative Easing (QE) tapering refers to a specific economic policy used to kindle the performance of an inefficient economy (Fabozzi, 2006; Adam and Thomas, 2004). All these segments need to be researched extensively in order to analyse the various trends, performance, behavioural patterns and several economic decisions taken in this regard. The research methodology to be adopted has been described in the following paragraphs.
Research methodology
As per the subject matter of the dissertation, it is very essential to frame an appropriate research methodology that gives an in-depth view of the concept to be covered. The methodology serves as a guideline or path that is generally followed by the researchers in order to achieve the required goals of the research (Kumar, 2008). The main purpose of an effective research methodology is that it helps to prevent any deviations in the course of the research. In this research proposal, the research objectives have been recognised based on which research designs have been structured. It also further outlines the various research approaches, research techniques, data collection methods and basis of evaluation. At the end, the grounds on which the outcomes of the research prove to be reliable and valid have been stated.
Research objectives
The research work done on MBS, Sukuks and QE tapering has certain goals and aims for which this research is required to be conducted. The research objectives outline the purpose as well as the outcomes that need to be analysed for completion of the entire research. The research objectives acts as the foundation of the research work as without the objectives being outlined, the research work serves no purpose (Vries, 2012). Hence, the various objectives of the research have been pointed out as follows:
• To bring out the various aspects of the financial crisis through extracting data from articles, journals and publications
• To help analyse the recent trends followed in MBS and Sukuks and in the tapering of QE
• The understand the usage of the forecasting methods that have been used to depict a picture of the behaviour of MBS and Sukuks
• The research also helps to bring out a feasible answer to the question as to whether the central banks should decide on using the QE tapering policy to improve the condition of the economy.
• Evaluating the progress of the indices that helps in tracking the performance of MBS and Sukuks bonds
• To critically analyse the data collected through Excel spread sheets, graphs and tables
Research design
The research designs generally followed are of three kinds: qualitative, quantitative and mixed research design. The qualitative design encompasses the method through which the observers are physically questioned or judged with regard to the subject matter (Denzin, 2006; Hakim, 2000). Here, in the context of MBS, Sukuks and QE tapering, qualitative design would mean enquiring the participants of the securities market, the customers who are involved in the dealings, the various investors to whom such bonds are sold and the banks that have adopted QE tapering. However, this design did not prove to be suitable as it is time-consuming and a lot of variations are found in this structure. The research design adopted in the context of MBS, Sukuks and QE tapering in this research proposal is entirely quantitative in nature. Since the trends and performance of MBS, Sukuks and the decisions taken on QE tapering need to be studied in the research, collection of secondary data and adopting a quantitative research design is highly suggestible. Moreover, such research methodologies also prove to be fruitful in respect to analysing the techniques of forecasting used for MBS, Sukuks and to study whether the central banks should decide on adopting the QE tapering policy for rebuilding the poor condition of an economy. Data have been collected from various journals, articles, financial websites, publications and other online sources for facts and figures on the trends, performance indices and behavioural patterns (Schneider, et. al., 2007; Shadish, Cook and Campbell, 2002). On the other hand, mixed research design is applied by combining the features of both quantitative and qualitative designs (Johnson and Onwuegbuzie, 2004). This research design too proves to be unsuitable for this research work as it is considered to be impossible for comparing the results of quantitative and qualitative designs in a combined sense (Tashakkori and Teddlie, 2003; Creswell, 2013).
Research philosophy
The most commonly used research philosophies are positivism, realism, interpretivism, objectivism and subjectivism. Positivism philosophy is reflected when a researcher adopts a quantitative technique pertaining to statistical data. It judges the credibility of the data that is collected. In other words, this philosophy is apt for those researches whose outcomes are unalterable in any circumstances like in the case of results generated from secondary data (Gill and Johnson, 2002). Realism is applicable where data collected is based on the experiences of the researchers, in other words, when data is collected in physical form by the researcher. This is in case of primary data collection (Dobson, 2002). Interpretivism philosophy relates to the research work that is conducted by being present within a society rather than by collecting data from analysing the presence of mere objects or things. This again is in favour of primary data collection or qualitative research design. Objectivism refers to the philosophy that is applied when there are variations in the views of the respondents. It works on the principle that all respondents cannot have the same view in respect of the same thing at the same time. In such situations, objectivity is said to be functional (Holden and Lynch, 2004). Lastly, subjectivism is said to function in a similar way as objectivism but there ought to be an existing difference between the two. While objectivism stresses on the culture of an organisation as something that is inherently present, subjectivism stresses on the same parameter as something that can be altered according to the nature of the forces acting within it (Kakkuri-Knuuttila, Lukka and Kuorikoski, 2008). In this particular research on MBS, Sukuks and QE tapering, positivism is said be applicable as it is the only philosophy that works well in researches that are conducted quantitatively.
Research approach
Corresponding to the research design, generally there are two types of research approaches that are followed. They are the deductive and the inductive research approaches. The deductive research approach is also referred to a “top-down” analysis (Burney and Mahmood, 2006). This approach begins with well-established theories on a subject which is followed by its proposition; then, comes the scrutiny of the propositions and finally, conclusions drawn from the observations. On the other hand, the inductive approach is a reversal theory of the deductive approach. Inductive approach is sometimes renamed as “hill-climbing” since its first step is the observational part; followed by studying its pattern, hypothesis and then, formulation of the ultimate theories (Burney and Jilani, 2008). However, with regard to the subject matter of this research proposal, inductive research approach is appropriate as the facts and figures, the performance and behavioural patterns of MBS and Sukuks and the importance of QE tapering is observed first, then the patterns are studied, hypotheses are derived and finally, broader generalisations and theories are developed.
Research method
The research method includes the entire process in which the relevant data is collected. Generally, there are two kinds of research methods: one is the quantitative method and the other one is the qualitative method. While the quantitative methods correspond to secondary data collection, the qualitative method is associated with primary data collection. The qualitative method is normally used in researches where the objectives demand explanatory views on the observations. The researcher itself assumes the role of data collection instrument and approaches a specific sample of respondents who give their views either for or against the subject matter. Such data is then gathered under a single prospective and analysed (Bernard, 2011). On the other hand, the quantitative method of research is applied through surveys which include fetching of data from online websites, journals, articles, financial reports, case studies and other sources. In line with the research objectives of this research proposal, quantitative method is assumed to be the most appropriate one, as the objectives demand analysing the trends and the performance and behavioural patterns in MBS, Sukuks and the QE tapering policy. Here, in this research work, relevant facts and figures pertaining to trends in MBS and Sukuks issuance and the decisive patterns in adoption of QE tapering for the time period of 2007 to 2014 have been gathered. These data have then been analysed to bring out results depicting the performance levels and the behavioural patterns in them. The data collected has also helped the central banks in deciding whether they can adopt QE tapering for improving the poor working condition of the economy. This method has also encircled data and calculations on excel spread sheets and graphs and tabular data.
Data collection
The two kinds of data that is collected for research purposes are the primary data collection and the secondary data collection. The primary data is collected through interviews, directly questioning respondents, telephonic contact with the respondents and distributing questionnaires. On the other hand, secondary data is collected by way of fetching and extracting facts, figures and statistics from online websites, journals, articles, case studies and many more internet sources (Ut, 2013; Kamarudin and Ahmad, 2010). The data collection method that have been used in this subject matter is the secondary data collection method as primary data do not serve any purpose for analysing the recent trends and movements in the securities and bond markets and also do not help in deciding on whether the adoption of QE tapering will actually benefit the economy. The reason behind the selection of secondary data collection method is that they prove to be strong factual evidences for the research that is conducted (Silverman, 2006). With the help of the secondary data, the trending figures of MBS and Sukuks from the period of 2007 to 2014 are linked and observed. Moreover, through data mining, the benefits of QE tapering has also been studied which serves a great deal to the bankers of the economy. In comparison to the primary data collection, secondary data collection method is quite faster, less time-consuming and also less expensive. Another vital importance of collecting secondary data for MBS, Sukuks and QE tapering is that it has served answers to many questions of the researchers. Some of the questions are:
• Whether the recent trends in MBS and Sukuks are in favour of a country’s economy or not?
• What has actually led to the central banks adopting QE tapering?
• Has the declining state of the economy improved through adoption of QE tapering?
• Do the trending indices that track the MBS and the Sukuks have a positive impact on the securities market?
Reliability and validity
The results generated from the research conducted have to be reliable and valid so that they can be applied in reality. It is very necessary to judge the accurateness of the theories developed in order to assess whether the results generated are in line with the objectives that have been outlined at the beginning of the research work. In order to evaluate the effectiveness of the observations, several techniques have been used in this research work. The reliability test of the quantitative research on MBS, Sukuks and QE tapering has been done in the following ways: firstly, by judging whether a repeated parametric data is the same at all locations available online and secondly, whether the measurement of a data remains the same over a given period of time (Punch, 2013). On the other hand, validity of the research methods has been done by analysing the following aspects of the method: laws explaining the facts and figures, the reasons given for such figures, mathematical calculations adhering to such figures and many more (Joppe, 2000). However, the reliability and the validity tests of the quantitative research methods reveal the same objectives. Firstly, it has been seen whether the results generated by the research represent the same result when the research is conducted twice. This is referred to the technique of Test-Retest Method (Sirriyeh, et. al., 2012). Secondly, it has also been rechecked whether the measurements and calculations are meeting the pre-determined measures need to be achieved.
Limitations of the research methods
No matter which research method is used in the analysis of the securities or bond market, they will always have some adverse implications on the outcome of the research; as such markets are subject to maximum fluctuations. On a similar note, the various research techniques that have been used in the context of the subject matter of the research proposal also have certain limitations. Neither the quantitative or the secondary method nor the qualitative or the primary method can generate accurate results. Although the methods have been applied after carefully scrutinising them, there may be variations in the secondary data collected. The reason behind such variations might be the irregular updating of the online sources, websites, statistical reports and many more (Schwab, 2013; Beri, 2013). Also, the origin of the data that is pulled out from the online articles, journals or reports may not be from trusted sources. Thus, the research work carried out based on such data fail to be feasible on grounds of reliability. Moreover, many a times, it has been seen that the data appear incomplete on the websites and reports.
Conclusion
Since MBS, Sukuks and the QE tapering techniques cover a large portion of a country’s economy; research work has become essential in such fields. In addition to the research conducted, it should also be kept in mind that the outcomes of the research is relevant for analysing the recent trends in their performance, behaviour in the securities market, forces working in favour of QE tapering and the performance of the indices that track the MBS and Sukuks. Moreover, fairly accurate data has to be collected for the same. The above mentioned research designs, methods and approaches should be combined in such a manner that they do not mislead the entire research methodology. All these facts as applied in the research work of MBS, Sukuks and QE tapering forms the subject matter of the research methodology. The research methodology has also laid down the evaluation techniques and the reliability and validity tests of the research results. Thus, it can be concluded from the above that an appropriate and supportive research methodology should always be in place when conducting a research work.
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