Evaluation the Experience of Islamic Banking Transformation in Libya

Abstract

     This study aims to shed light on the experience of banking transformation in Libya to evaluate and 2weakness of political, security, and administrative. The two researchers assessed the level of transformation performance based on the available data and information, as well as, on the distribution of a questionnaire targeting 50 employees of the leaders of Islamic banking in the main banks that practiced in Islamic banking activity in Libya. Accordingly, the study concluded that the experience of banking transformation in Libya is weak. Also, it fluctuated between adopting the concept of bank transfer, which means obligating banks to implement the transformation and approving their business in line with the requirements of the law on preventing usurious transactions No. 1 of 2013 and the concept of voluntary transformation adopted by Law No. 46 of 2012, which adopted the concept of a mixed system and opened the way for banks wishing to convert to initiate this with their own will and capabilities. Moreover, In the light of the blurring of the vision and the lack of clarity of the strategy, and the absence of a transformation plan approved by the concerned authorities and sponsors of the transformation project, which the legislation has not clearly defined and in an environment that witnessed weak security, political, and administrative instability, the banking transformation project in Libya was negatively affected, as banks were unable to handle their traditional credit portfolios, despite the achievement of some achievements, for instance, the volume of Islamic bank financing reached 27% of the total financing volume in 2016. The study recommended the necessity of working on formulating a vision and strategy with clear features and objectives, identifying the bodies responsible for sponsoring the transformation project, and working on evaluating the existing stage and building upon it in the development of Islamic banking in order to achieve the adoption of an Islamic banking and financial system that meets the requirements of the stage and benefits from previous experiences and stages, and seeks to achieve Practical and realistic goals that can be reached.