CHAPTER 3 RESEARCH APPROACH AND METHODOLOGY
3.4. Data Collection, Respondents & Ethics
Mixed method research involves both quantitative and qualitative methodologies, and the nature of data collection techniques depends on the particular study designs developed (Axinn and Pearce 2006). In this study, the data collection procedures follow the concurrent method in which both qualitative and quantitative data were collected in the same time frame from the same BMTs, but the qualitative was weighted more than quantitative data (Creswell and Clark 2007). The collected information comprises primary data from BMT institutions and informants that was gathered through an open- ended questionnaire, in-depth interviews, focus group discussions and observation. The secondary data was largely obtained from official and institutional sources. The use of diverse data collection techniques and sources would increase the reliability, credibility and validity of the obtained dataset.
3.4.1. Questionnaire
The underlying concept of the survey and questionnaire is to interrogate larger samples, in this case, to develop a general picture of the BMT sector (Axinn and Pearce 2006).
Through a standardized – open-ended – questionnaire, it can capture diverse issues and general attributes of BMTs in the region. The purpose of questionnaire was to examine six important issues that influence the BMTs’ development and enhance their vibrant operations within the eco-socio-religious structure of the communities:
1. Establishment and motivation: The aim of questions is to collect the background of the BMTs, motives, visions and objectives of its establishment, and key local and national stakeholders and Islamic organisational supporters.
2. Institutional structure: The inquiry includes information about the organisational structure, the board of management and supervisor, human resources recruitment, staff development and management succession.
3. Business profile and modus operandi: The list of questions is designed to identify the business environment surrounding the BMTs, its products and services, and its operational methodology.
4. Operation and risk management: The questions refer to an operational manual, transactional contracts, non-performing loans (NPL), supervisory mechanism and fraud prevention.
5. Governance and Sharia compliancy: This refers to AGM reporting, the board of management and supervisor election, the decision-making process, monitoring and controlling mechanisms, source of Fatwa and Sharia certification, the Sharia supervisory board and the mechanism of assessment.
6. Socio-religious activities: Questions related to the organisational structure of Baitul Maal, charitable fund raising and allocation, programs with a socio-religious orientation, benevolent loan management and supervision, and the impact of the socio-spiritual programs.
The questionnaire was pilot-tested twice and subsequently revised on the basis of feedback and evaluations. The final questionnaire was distributed to BMT members of PUSKOPSYAH in various circumstances, such as at meetings, training sessions and other gatherings. In addition to the questionnaire, BMTs were also requested to submit a copy of their financial contracts, brochures, leaflets and other relevant printed information.
3.4.2. Financial Statements
In this study, the BMT respondents were expected to provide financial reports that comprised a published balance sheet, profit and loss statement, NPL reports and other relevant information. To ensure the data was valid and reliable, the financial report must have been approved by the AGM and audited, if possible.
Walsh (2006) suggests that financial statements should comprise a balance sheet, which states assets and liabilities at a point of time, and a profit and loss statement, which demonstrates revenues, expenses and return generated from the institution’s activities for a one-year period. The financial figures should reveal total assets, earning assets, loans outstanding, deposits and saving, borrowing, capital, operational income, income from loans, return from investments, operational costs, human resources expenses, non- operational expenditure, profit before tax, compulsory charitable donations (Zakah) and details of loan classifications (current loans, sub-standard loans, doubtful loans and loan loss, including classified loan reserves).
As mentioned earlier, this study was a longitudinal process, therefore the financial statements collected cover three consecutive years from 2008 to 2010. The continuous financial dataset would enable the researcher to carry out the performance and
sustainability assessments, and to understand the historical trend and the nature of the BMTs’ development pattern over time. In addition, the longitudinal observation was very important because, as small microfinance institutions, the BMTs’ performances is quite sensitive to unexpected internal and external events, for instances fraud, natural disaster and so forth.
3.4.3. In-depth Interviews
This study used a semi-structured method to obtain primary data from key informants who are associated with the unit of analysis. Seidman (2006) and Gillham (2000) state that an interview is a typical survey tool to assist the researcher to collect qualitative information, and in many cases it allows unanticipated information to emerge in the discussion.
The interviews were conducted in a variety of circumstances in Jakarta and Yogyakarta.
The interviews involved key informants who represented diverse institutions, occupations, roles and backgrounds (see Table 3.2). The first key informant to be interviewed was the Director of PBMT, as he was one of the prominent BMT activists and formerly the Chairman of BMT Center that holds essential information on the national BMT sector including BMTs in the Yogyakarta region. Other important respondents included the Chairmen of PUSKOPSYAH and BMT Association (Asosiasi BMT Seluruh Indonesia or ABSINDO). As the leaders of apex institutions of BMT in Yogyakarta, the informants are very familiar with individual BMTs and the nature of BMT development.
Accordingly, based on information and suggestions from the interviewees and other sources, a snowball technique was developed in order to expand the network’s critical respondents for in-depth interviews. Technically, the snowball approach was very helpful to identify relevant interviewees, particularly those who could not be identified at the beginning of research (Biernacki and Waldorf 1981; Czaja and Blair 2005).
In general, the interviews were conducted in natural settings such as in the respondents’
offices, which helped make the discussions quite smooth and, after the interview, the on-site observations were undertaken in order to develop a picture of the activity of employees, clients, the office situation, facilities and the business environment around the BMTs.
The interviews used a semi-structured technique, so the researcher deliberately directed the interviewees by posing open-ended questions and maintained the discussion on the right track. The interview sessions were limited to between 60 and 90 minutes, and all the discussions were taped, with the interviewees’ agreement, to ensure none of the information was lost. In addition, note-taking was very important, in particular to write down interesting issues about the informants’ points of view and situation of the offices, sites, houses and the surrounding areas.
3.4.4. Focus Group Discussions
The FGDs were designed to capture different opinions among the BMT practitioners and client members. FGDs were used to confirm and validate the previous discussions, opinions and comments that were obtained during the interviews, observations and feedback from the questionnaire (Bloor et al. 2001). They are also a useful tool to fill information gaps as well as to identify consensus opinions related to certain issues.
The first FGD was conducted during the holy month of Ramadan with the generous support of the Islamic Economic Study Centre of the University of Islam Indonesia (UII), Yogyakarta. The discussion involved 30 participants as the representatives of BMTs, PUSKOPSYAH and academicians. The FDG was developed through the directed discussion technique and the questions related to the following broad issues:
1. The motivations and roles of Muslim elites in supporting the BMT sector 2. Regulation, supervision and good corporate governance
3. The Riba issue and Sharia compliance practices
4. The modus operandi, financial products and services, and the operational platform 5. Socio-religious responsibility and the duty of BMTs to the community
6. The business environment, challenges and the future development of the BMT sector.
The second FGD was conducted at the BMT Beringharjo, which manages benevolent financing programs to assist poor households in several areas. Finally, three other FGDs were conducted among the client members in Yogyakarta. The FGDs were focused on client members who had participated in the Sahabat Ikkhtiar Mandiri program of the BMT Beringharjo in three villages in DIY province. The detailed information about the clients’ backgrounds, financial matters and motivations, as well as confirmation about the roles of BMT in the communities, was sought through the FGDs.
3.4.5. Informants and Resource Persons
The main interview and focus group discussion respondents and key informants were chosen among the government officials, members of the National Sharia Council (Dewan Syariah Nasional or DSN), non-government agencies, BMT associations, Muslim leaders, academicians, BMT managements and staffs, members of the Sharia Supervisory Board (Dewan Pengawas Syariah or DPS) and client members.
Occasionally, informal interviews were conducted with people directly or indirectly associated with the BMTs’ offices. As discussed in Section 3.4.3., the selection of informants was based on snowball suggestions from the key informants in the first round of interviews. The list of respondents and informants is presented in Table 4.2.
3.4.6. Secondary Data
The secondary data was sought from different sources that comprised government laws, regulations and policies that related to the BMT sector, the Fatwa on Islamic banking, and published and unpublished statistics, research publications, archival records, brochures, leaflets and other relevant documentations.
The major suppliers of secondary data were:
1. The Ministry of Cooperatives, and the provincial and regency cooperative offices 2. The Ministry of Social Affairs
3. Bank Indonesia (the central bank) and its regional office 4. The Revolving Funds Administration Agency (LPDB) 5. The National Sharia Council (DSN MUI)
6. The provincial office of the Indonesia Statistical Bureau (BPS DIY) 7. The cooperative apex institutions (PNM-INKOPSYAH, PUSKOPSYAH)
8. Research centres and universities (University of Indonesia, Trisakti University, University Islam Indonesia, University Syarif Hidayahtulah)
Table 3.2. Key Informants and Source of Data Collection
Institutional Respondents and Key Informants
Data and Information Method
A. Government agencies
1. Deputy minister and head department of the Ministry of Cooperative 2. Head and deputy head of Provincial
Office of Cooperatives 3. Deputy minister and head of
department of the Ministry of Social Affairs
4. Staff and researcher of the Central Bank (Bank Indonesia)
5. The Chairman of the National Committee for Microfinance Development (PKMI)
6. Manager the Revolving Funds Agency (LPDB-KUM)
7. Member of the National Sharia Council
National policies, regulation and supervision
Local policies, regulation and supervision
Information regarding poverty alleviation program through BMT system
Policies, regulation and supervision of banking system including Sharia bank Roles and programs of PKMI in supporting the microfinance sector Roles of LPDB as a semi-governmental institution and management of revolving funds
Fatwa on Islamic banking and finance transactions
Interview
B. BMT associations/support institutions
1. The Executive Director OF PINBUK 2. The Chairman of BMT association
(ABSINDO)
3. The Chairman of BMT Center (BMTC) 4. The Director of PT. Permodalan BMT
(PBMT)
5. The Chairman of the apex institution of the Islamic cooperative (INKOPSYAH and PUSKOPSYAH)
6. The founder of the Dompet Duafa Foundation (DD)
Information on BMT sector at the national and regional levels Roles of associations Capacity-building programs Funding support
Roles of Islamic charitable organisation and supporters of BMT development Roles of apex institutions
Interview
C. Bank and financial institutions 1. Management Sharia Banks: Bank
Muamalat Indonesia, Bank Mega Syariah, BRI Sharia, and BPRS HIK 2. Financial institutions (Pegadaian,
LPDB)
Information on Islamic banking and
finance market and services Interview
D. Muslim leaders and founders of BMTs
1. Muslim leaders, founders and supporters
2. Scholars
Insights on Islamic banking, microfinance and BMT
Roles of Islamic scholars and their perspective toward BMT, poverty alleviation and socio-religious issues in the communities
Interview
E. BMT institutions and clients 1. BMT managements and employees 2. The Sharia supervisory boards 3. Clients
Information about their roles and their points of view toward the BMT system, modus operandi, and roles in poverty alleviation and empowerment in the communities
Opinions regarding BMT, their perceptions and personal experiences with BMT
Questionnaire Interview Focus group discussion Observation
Source: Author compilation from field study 2010
3.4.7. Ethical Practice
The ethical procedures of the Victoria University’s Code of Ethical Research informed and guided this study. All respondents had been informed of the study objectives, probability of risk and each respondent was asked to sign the consent letter.19 For the interviews and focus group discussions, the ethics procedures were explained and the respondents’ consent was recorded. Also, the participants were informed that they were able to withdraw from the study at any time without any consequence. They were also given the address, telephone numbers and emails of the principal supervisor and the university research office, to use if they had any further questions regarding the research. The ethical issues also related to the financial performance and Sharia compliance of BMTs, which were very sensitive matters for the BMT management, client members and the reputation of particular BMTs. Because of this sensitivity, the study did not examine individual BMTs; instead, an assessment was made of a cluster of BMTs based on total assets, region and age of the BMTs.