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A market research of bank loans in banking industry in Malaysia:

A case study of Maybank

A Research Proposal
Prepared by

Ng Chung Yean

Master of Business Administration
Cardiff Metropolitan University

16 April 2014

Table of Contents

List of Tables


List of Figures


Chapter 1 Introduction

1.1 Background
1.2 Purpose and Problem Statement
1.3 Significance of Research
1.4 Research Questions
1.5 Research Objectives
1.6 Research Framework



Chapter 2 Literature Review


Chapter 3 Research Methodology

3.1 Research Methods
3.2 Sampling and Sample Size
3.3 Data Collection
3.4 Ethical Considerations
3.5 Expected Outcomes
3.6 Timeline and Gantt Chart






List of Table

Table 1

Research plan



List of Figures

Figure 1

Theoretical framework



Chapter 1 Introduction
This chapter basically covers the introduction of company, research significant, problem
statement, research questions and research objectives.

1.1 Background
Malayan Banking Berhad (Maybank, 2012) is the largest banking and financial services
group in Malaysia, founded in 1960. Maybank became the first bank in Malaysia, that
computerizes its savings and current account services in October 1978, set up an ATM in
Kuala Lumpur in September 1981, offer Autophone for making customers the convenience of
conducting their banking transactions and payment of selected utility bills through a
computerized telephone service in September 1992, offer internet Banking service through its
online financial portal in June 2000. Maybank also is the first bank in Malaysia that offer
Malaysia Bancassurance services and become the No.1 in Bancassurance business.
Maybank is the leading banking group in South East Asia for over three and a half
decades. Maybank expand internationally with a network of over 1750 branch offices in 14
countries and major financial centre in London, New York, Hong Kong and Singapore, it has
correspondent banking relationships with 700 foreign banks throughout the world. Maybank
also has the largest asset, amount more than USD100 billion, and about USD18.6 billion of
market capitalization, USD9.1 billion of total equity and USD1.2 billion of total net profit.
Maybank offers a range of services from commercial banking, investment banking, financial
services, insurance, trustee services, factoring, asset management, stock broking, property
and unit trust fund management to venture capital.
Maybank set up vision of to be a regional financial services leader and mission of
humanizing financial services from the heart of ASEAN, objectives of No.1 retail financial
services provider in Malaysia by 2015, leading ASEAN wholesale bank by expand to Middle
East, China and India, domestic insurance champion and emerging regional player, truly
regional organization with 40% of pre-tax profit from international operation by 2015,
become the largest Islamic bank in ASEAN, look for growth opportunities and maximize
value of shareholder. Maybank operates with teamwork, integrity, growth, relationship
building, excellence and efficiency as their core values (Maybank, 2012).

1.2 Purpose and Problem Statement
Loan is called the convention that one of the parties (lender) transfers to another (debtor) the
ownership of things (cash or securities normally) and the debtor has the obligation to repay
the things of the same quality and quantity of paying or not interest on the loan. The loan
taken by the debtor to cover needs that cannot meet with current revenue. Moreover, the loan
is a form of capital by companies for the expansion of their business.
As loans are becoming growingly more accessible via the Internet and expert loan
companies are more willing to consider providing loans for people with a bad credit history,
now is a good time to borrow money for home improvement or that new car. But, with the
wide selection of loans available, how does debtor know the right type of loan that they need?
Maybank is the largest commercial bank, be it in terms of asset, net profit,
shareholder equity (or book value) and number of employees (Peek, 2005). Hence, the aim of
the study is to gain a better understanding overview of bank loan industry and to analyse to
what extent the factors that contributed to Maybank in the financial business.

1.3 Significance of Research
To determine what is the main factors that affect Maybanks loan products toward of
customers who applied. This research will benefit to customer or company who attempt to
apply loans to build their business or property. Moreover, Maybank can provide better market
analysis to show the currently market feasibility. A lot of companies apply loan to build or
extend their business in order to achieve growth for their investment. From the students
point of view, this can allow students to know what the importance of bank loans is and
create their consciousness to build their business or personal use.

1.4 Research Objectives
i. To study the bank loan products that offered from Maybank in Malaysia.
ii. To analyse the financial profitability of Maybank loans business in Malaysia.
iii. To examine the impact of financial risk in bank loans of Maybank in Malaysia.
iv. To explore how market factors affect bank loans industry of Maybank in Malaysia.


1.5 Research Questions
i. What are the bank loan products that offered from Maybank in Malaysia?
ii. What is the financial profitability of Maybank in term of bank loans in Malaysia?
iii. How does financial risk impact the Maybank loans business in Malaysia?
iv. How does the market factor affect bank loans industry of Maybank in Malaysia?

1.6 Research Framework

Figure 1 Theoretical Framework

Financial risk of
Maybank loans
Market factors of
Maybank loans
business in banking
profitability of
Maybank loans
Bank loan
products offered
from Maybank
Market research of
Maybank loans
business in

Chapter 2 Literature Review
This chapter discussed about the critical review of the literature related to this study. First of
all, the factors that mentioned in theoretical framework will be discussed about the concept
and overview of bank loan in different region view.
Base lending rate is yet to be used by other researchers as one of the determinant of
savings. BLR represents the lowest interest rate charged for bank loans. Changes in the rate
will have a direct relationship with credit available to customers. Increase in the rate means
higher cost of borrowing to customers and also serves as an indicator whether they can easily
obtain financing for their needs as well as their capacity to pay back the loans. When people
are refrained from extensive borrowings due to high BLR, they are induced to save in
anticipation of future consumption needs that cannot be financed through credit. Therefore,
BLR is expected to have a positive relationship with savings. This variable also can be used
as proxy for financial liberalisation. In most cases, central bank is responsible in determining
the BLR of banks in the country. One of the indicators for liberalisation is that banks are free
to choose their rates. Hence, frequent changes in lending rates reflect the openness of the
country. Based on this conjecture, we hypothesise that as a country becomes liberal, savings
rate will rise in tandem with this development (Sudin and Wan, 2008).
Another new variable introduced in this study is the KLCI. This variable represents
the future growth in the economy and the confidence level of people towards the economy of
the country. If people are optimistic about the economic growth, instead of putting their
money in the bank accounts, they will buy stocks hoping that they will benefit from higher
dividend rates and capital gains. Therefore, it is expected that this variable will have an
inverse relationship with loan rates (Sudin and Wan, 2008).
In the case of BLR, any increase in this variable should result in an increase in the
amount of bank deposits. This is true for conventional but not for Islamic bank customers.
One feasible explanation is that they believe Islamic bank will uphold Islamic teachings and
continue its effort in providing services and giving out loans to its customers even during
poor economic and financial conditions. In the case of current account, a negative
relationship is found with the current account of conventional banks. A possible reason that
can be forwarded is that most of these customers have credit facilities, and thus they have to
pay more for their loans (Sudin and Wan, 2008).

According to Alkassim (2005), liquidity plays an essential role in determining the
profitability of bank. By taking the net loans to total asset as a liquidity proxy, this ratio
provides a measure of income source. Loans are the largest component of interest bearing
assets of a bank and are expected to have a positive effect on bank's profitability (Vong and
Hoi, 2009).
Collateral is a widespread feature found in many loan contracts (Christian, 2007).
According to Elsas and Krahnen (2002), the argument for the use of collateral is to create a
strong relationship to the lender, which will become especially beneficial for a borrower in
the case of financial distress. Under prudent loan management, a loan is free from default risk
when it is fully collateralised. In this sense, the interest income is acquired by the lender
without potential losses, since there is no uncertainty about loan recovery when the borrower
fails to pay up. This is an extreme side of a financing contract, where the borrower bears the
risk of bankruptcy, whereas the lender takes no risk at all. The lender is a risk avoider since
he rejects taking risks with an expectation to gain in granting the loan. He desires to make
money from the loan but refuses to face uncertainties of non-repayment.


Chapter 3 Research Methodology
There are two types of research methodology, known as qualitative and quantitative research.
Qualitative research is defined as a mixture of rational serendipitous and intuitive in which
the personal experiences of the organizational and researchers are often key events to be
understood and analysed as data (Maanen, 1979). Meanwhile, quantitative research is to be
defined as explaining phenomena by collecting numerical data that are analysed using
mathematical based methods (Aliaga and Gunderson, 2002).
The designed methods of this research are exploratory and analytical in nature.
Exploratory research is to gain better understanding to the bank loan concept while analytical
research is to perform financial analysis for existing companies and project their future
performance. This study aims to study the bank loan industry and also to investigate to what
extent did bank loan contributed to the Maybank. Since the research project makes extensive
use of quantitative research, therefore it can be conclude that the qualitative research does a
minor require in this part. This chapter covers the research method, sampling design, data
collection, ethical considerations, expected outcomes and timeline.

3.1 Research Methods
The research method use in this study is quantitative research design. Quantitative research
method usually for finalize the result. Besides it is also can proving and disproving a
hypothesis persuasively. In order to generate the result, having a complete data is crucial.
Data can categorize into two forms which are primary and secondary data. Primary data can
be obtained by questionnaire. While secondary data can be collected from books, census data,
journals and article. In this study, both methods are conducted to collect the relevant
information that is important to this study (Shuttleworth, 2008).
The research approach can be dividing into different type for carry out a research.
One of the command types of scientific research is correlation research studies. These studies
are used for relationship between variables. It is important to have a good understanding of
related research and cooperation between variables. Therefore, apply correlation into this
study is because need to investigate the relationship between the factors and Maybank
towards bank loan products. In others words which mean this study was to find out whether

the factors do really have relationship in influencing Maybank business growth towards bank
loan products.

3.2 Sampling and Sample Size
Sampling design can be defined as measuring a small group of peoples, the sample who are
to provide the researcher data to draw a general statement about the whole thing. Basically is
select a number of units for a study in such as have been form, then the data process can be
soon started. Before start to process, there are two types of data can be collect by the
researcher which is primary data and secondary data. Respondents are asked to complete a
survey through paper questionnaire. There were 10 questions have been asked in the
questionnaire. For factors that influencing consumer to apply bank loan will be allocated at
section B, which contain questions that affect consumer attitude toward applying bank loan.
Five Likert Scale was mainly used in conduct the survey. This is because Five Likert Scale
allowed respondents to speak out their strength of agreement toward each of the statements
regarding to the respondent own feeling (Wuensch, 2005). Respondents are required to
indicate their degree of agreement by choosing only one of 5 point ordinal scale (5 = Strongly
Agree; 4 = Agree; 3=Neutral; 2 = Disagree; 1 = Strongly Disagree).

3.3 Data Collection
There are several types of research instruments to obtain the data such as secondary data,
surveys and observation. To create questionnaire for the respondent researcher will use paper
survey to conduct the survey. This is because the paper survey can speed up their survey,
efficient, accurate, moreover can distribute into large quantity. The questionnaire was
separated into two sections which are Section A and Section B. Section A is demographic
which profile of respondents, including were 5 close ended questions. Section B contained 5
questions that covered the hypothesis.
To do an online survey, first have to create survey questions in Google doc than send
to all respondents through social network such as Facebook and E-mail. Despite can collect
back 20 sets of online survey but it take 10 days to collect it, this is because some of the
respondents will ignore it although they have seen it and they only will do the online survey

when they are free. Besides that, many of respondents might feel troublesome when see all
survey question so refuse to do it. In addition, some of respondents will feel that is not
important and waste time to fill in the survey question.
In the end distributing survey questionnaire would use as sampling method. Through
distribute survey questionnaire, its save a lot of time to collect all the data and efficient. Thus,
the questionnaire was distributed in Maybank branches around Klang Valley. The purpose
would be let respondents clearly understand the purpose of the research and will tell them all
of the information and data will keep confidentially. This is important because some of the
respondents might scare their personal details will disclose to the third party might make
respondents refuse to do the survey questionnaire.

3.4 Ethical Considerations
Throughout entire of this questionnaire survey, respondents will be informed consent before
answering any question from the survey. The reason of this is to assure that the data collected
is genuine for the research of this study. The information that collected from respondents is
protected in privacy and confidentiality. Respondents are also having the right of refusal from
accept the questionnaire survey. This is to ensure that the information being collected does
not affected from any unwilling circumstances. The entire process of collecting data form
questionnaire is done by professionalism and impartiality.
The research of this study will be completed with quantitative and qualitative research
data with exceptionally from plagiarism.
3.5 Expected Outcomes
The research of this study will be completed in 12 weeks. The outcome of this research is to
investigate and understand the factors that affect customer preferences from applying bank
loan with Maybank. The issues that will be study in this research is supported by
questionnaire survey. This is to ensure that the information collected is sufficient enough to
prove the factors are related.


3.6 Timeline and Gantt chart
April May June
No. Task

1 Writing of proposal

2 Proposal approval

3 Collection of data

4 Data analysis

5 Draft report

6 Supervisor's feedback

7 Revise report

8 Final report submission

Table 1 Research plan


Alkassim, F.A. (2005), "The profitability of Islamic and conventional banking in the GCC
countries: a comparative study", Journal of Review of Islamic Economics, Vol. 13 No.1, pp.5-
Aliaga, M. and Gunderson, B., 2002. Interactive Statistics. 2
ed. New Jersey: Prentice Hall.
Asubel, L. M., 1991. The failure of competition in the credit card market. American
Economic Review, 31 (1), pp.50-81.
Christian, K. (2007), "Do good or bad borrowers pledge more collateral?", International
Journal of Managerial Finance, Vol. 3 No.2, pp.132-63.
Elsas, R., Krahnen, J.P. (2002), "Collateral, relationship lending and financial distress: an
empirical study on financial contracting", University of Frankfurt.
Maanen, J. V., 1979. Reclaiming qualitative methods for organizational research.
Administrative Science Quarterly, [e-journal] 24 (4), Available through:
organizational-research-preface> [Accessed 16 April 2014].
Maybank, 2012. Online annual report 2012. [online] Available at:
[Accessed 16 April 2014].
Pek, C. G., 2005. Intellectual capital performance of commercial banks in Malaysia. Journal
of Intellectual Capital, [e-journal] 6 (3). Available through:
<> [Accessed 16 April
Shuttleworth, M., 2008. Qualitative research design. [online] Available at: <> [Accessed 16 April 2014].
Sudin Haron and Wan Nursofiza Wan Azmi, 2008. Determinants of Islamic and conventional
deposits in the Malaysian banking system. Managerial Finance. Vol 34 No.9 pp.618-643.
Vong, P.I.A., Hoi, S.C. (2009), "Determinants of bank profitability in Macao", Macau
Monetary Research Bulletin, No.12, pp.93-113.

Wuensch, K.L. (2005), What is a Likert Scale? and How Do You Pronounce 'Likert?', East
Carolina University, Greenville.


Section A: Respondent Background
Please tick () the relevant boxes and fill in for the line.
1. Gender:
Male Female

2. Age: under 18 years old 18 to 25 years old 26 to 30 years old

31 to 39 years old above 40 years old

3. Monthly income:
Less than RM2500
RM2501 RM5000
RM 5001 RM10000
RM10001 and above

4. Do you own a loan with Maybank?
Yes No

5. What did you apply loan for?
Business expansion

Section B:
Please indicate your degree of agreement that influence your attitude on applying of bank loan
from Maybank by ticking () on the relevant boxes to show your degree of agreement.

Disagree Neutral Agree Strongly
1 Maybank has the best reputation in
banking industry

2 Maybank offered loan that more
suitable to my personal/business

3 I have saving/current account or
credit card with Maybank

4 Property/housing authorised
Maybank as their preferred bank

5 Loyal customer of Maybank and
has more privilege than any other