The Extent of Compliance with the Central Bank of Libya’s Islamic Banking Governance Guide: A Field Study

Abstract

   This study aimed to identify the extent of compliance with the Islamic Banking Governance Guide issued by the Central Bank of Libya, specifically within Islamic banks operating in Libya. The study employed a descriptive-analytical methodology, utilizing a questionnaire as the primary data collection tool. The study population consisted of 120 individuals, including financial managers, department heads, accountants, and internal auditors working in the Islamic banks under study. A stratified random sample of 90 individuals was selected to ensure representation of the various job categories within the study population. 87 questionnaires were returned, of which 84 were valid for statistical analysis.  To analyze the data and test the study hypotheses, a range of descriptive and inferential statistical methods appropriate to the nature of the data and the study's objectives were employed. The study concluded that the Islamic banks under investigation largely implement the pillars of the Islamic Banking Governance Guide issued by the Central Bank of Libya. However, further development and improvement are still needed, particularly in areas where compliance was relatively lower, most notably disclosure and transparency, the powers and responsibilities of board committees, and the powers and responsibilities of the Sharia Supervisory Board. The study recommended strengthening governance principles and enhancing internal control systems to align with the nature of Islamic banking products and services.