1.3 Research Questions
From a general point of view, there always exist some
research questions to help in achieving the aims and objectives of any
research. This therefore implies that it is not only important but very
imperative in identifying some key questions for which the answers will be
sought through out the research. It is assumed that when questions are well
defined and precise, it is easier and helps the researcher in determining the
scope of the study thereby remaining focus on this scope (Porter, 2003). It is
evident that these research questions help the researcher in
writing the literature review, tailoring the study framework
as well as setting up what techniques to apply and their analysis. In this
regard, this research aims at answering the following questions:
Question 1: What types of risks affect financial performance
of financial institutions?
Question 2: What financial regulations methods can be used
and how will they be implemented?
Question 3: How financial institutions manage risks and
Question 4: What are the key factors affecting preferences
for managing risks, financial regulations and value creation?
Question 5: What is the perception of managers regarding risk
management, financial regulations and value creation approaches used?
Question 6: What value creation strategies are to be used
in financial institutions that will fully incorporate risks management and
financial regulations and how successful will these strategies be?
1.4 Aims and Objectives
Specifically, this research aims at critically analysing how
financial institutions deal with financial regulations, risk management and
value creation, hence the research aims at achieving the following
. Explaining the meanings of financial regulations, risk
management and value creation.
. Reasons for financial regulations, risk management and
. Methods of financial regulations, risk management and
? Identifying and determining risks that affect financial
performance of financial institutions.
? Examining financial regulations, managing risks and value
creation approaches of financial institutions.
? Identifying key factors hindering financial regulations,
risk management and value creation strategies
? Examining the perception behind managers behaviour towards
financial regulations, risk management and value creation approaches
. Recommendation of the importance of financial regulations,
risk management and value creation in financial institutions.
According to Lind et al, 2005, a hypothesis could be defined
as a statement made with reference to a population parameter which is developed
for testing purposes. Although, Zikmund, 2003, looks at hypothesis from a
different point of view where he sees hypothesis as an unproven proposition
that explains certain facts tentatively and these facts can be tested
empirically. Hypotheses are usually expressed in two forms: the null and the
alternative forms (the exact opposite of the null hypotheses),whereby the null
hypothesis is usually a more naturally conservative and dogmatic statement
about the status quo which is tested using statistical evidence and helps in
rejecting any contrary propositions not tied to it. The null hypothesis is
usually denoted by (Ho) with the alternative denoted by (H1).
Therefore for the purpose of this research, the hypotheses shall
be stated as follows:
Ho: Financial Regulations, Risk Management and
Value Creation are the main factors influencing investment decisions in
H1: Financial Regulations, Risk Management and Value
Creation, are not the main Behavioural Factors influencing investment decisions
in financial institutions.
Researches in behavioural finance show that the process of
decision-making is subject to a number of cognitive illusions which are grouped
into heuristic (overconfidence, gambler's fallacy as well as
availability bias) decision processes and the prospect theory (regret
and loss aversion). These behavioural factors equally play an important role
when the investment decision-making process is concern.