Determinants of commercial banks employees' readiness to convert to islamic banking in Libya

Abstract

One of the most challenging issues facing the conversion of conventional banks to Islamic banks in Libya is identifying the factors that ensure the successful implementation of this conversion process. This study investigates the determinants of employees' readiness to convert to Islamic banking in the Libyan commercial banking sector. To address the above, this study adopts the organisational change theory, in particular, the climate of change combined with personal values theory as the guiding theories of the research. The study encompasses nine determinants as independent variables. These are general support by supervision, trust in leadership, participatory management, cohesion and politicking, involvement in the change, ability of management to lead change, attitude of top management toward the change and openness to change whereas Readiness for change is the dependent variable. Two more variables ( openness to change and nature of change) were inserted to test their moderating effect between two independent variables (involvement and openness) respectively and the dependent variables. To analyse these relationships, the study adopted a quantitative approach using Structural Equation Modelling (SEM). The study adopted a self-administered questionnaire survey where a total of 482 surveys were distributed of which 316 were useable. The findings of this research revealed that general support by supervisors, involvement in the change process as well as openness to change have a positive and significant impact on employees" readiness for conversion to Islamic banking. Furthennore, the findings showed that trust in leadership, participatory management, attitude of top management are statistically insignificant. Lastly, the study found a significant full moderation effect of openness to change on the relationship between involvement in the conversion process and employees' readiness to convert to Islamic banking. Moreover, a partial significant moderation effect was also found for the nature of change (imposed and voluntary) with negative direction between openness to change and employees' readiness for conversion. This means that imposed change does not affect employees' readiness for the conversion regardless of the openness level of employees whether high or low. In addition, the findings also indicated that the applied theories using the (OCQ-C, P, R) and (PVQ) instruments are valid for predicting employees' readiness to convert to Islamic banking in Libya. Recommendations of the study will assist bank managers, regulators, and the Central Bank of Libya to identify the obstacles related to human factor that hinder the conversion process. The study concludes that the positive impact ofleaders' supportive climate, openness values and engaging employees in the conversion process for the successful and smooth transfonnation process will have a long-lasting effect to solve problems resulting from the lack of employees' readiness to convert and hence reducing employees' resistance to change.