57 Chapter III Research Methodology This chapter sets out the methodology being adopted for obtaining an understanding of how to describe and reason about financial system vulnerabilities. III.1 Introduction The global economic downturn and covid-19 pandemic recently affect the economy all around the world. Indonesia, which located close to Wuhan - the outbreak epicentre, starts to suffer from the impact particularly on the financial system stability. This research attempts to find an integrated (composite) indicator that can be used to capture the systemic risk or financial system vulnerability using micro- data framework in national and regional level. In fact, there is a need to develop an integrated indicator to monitor and mitigate the systemic risks, not only for financial sectors (mostly banks) but also real sectors (mostly corporations) in the national and regional (province) level. Some risks related to financial system vulnerability can be captured from secondary/official quantitative data. The organization of research methodology in this chapter is as follows: Section III.2 describes the research philosophy underlies the research, as a choice of paradigm on how the reality becomes make sense. According to underlying research philosophy, then reasoning method as a research approach should be selected to withdraw a conclusion. Section III.3 discusses about data and research methods. This section is a core of the research methodology that covers the research strategy selection (such as Experiment, Survey, Action Research, and Case Study), the research choices (such as mono method, multi-method/mixed method), and the source of data. Further, it will show the proposed research models to answer the research questions, and the reasoning as to why choosing this approach for the study developed from past literature. Then, time horizon that will explain the data frequency selection, such as cross sectional, longitudinal, or mixed. Afterwards, choosing dependent and independent variables to be used in the proposed research model, considering 58 reliability and validity test in the secondary data, as well as discussing the ethical issues. Section III.4 shows the expected research timeline to complete the study. Finally, Section III.5 resume all the contents of this chapter. III.2 Research Philosophies The research reflects the positivism (naive realism paradigm) as a philosophica l choice due to concerning with facts. Ontologically, data collection is clear facts (absolute truth) about the financial system vulnerability with no interpretation due to using secondary/official quantitative data from the authorities. Epistemologically, social reality about financial system is external and the author’s involvement in the research is objective. There is a distance or no interaction with the research object. The research will observe measurable variables in term of vulnerability indicators that capture systemic risks in the financial system.