Abstract:

Converting from conventional to Islamic banking involves significant changes due to the different nature of conventional and Islamic banks. Actually, Conventional banks are facing several obstacles due to non-existence of comprehensive framework for the conversion process. Some prominent obstacles are shari’ah compliance, resistance of conversion, human resources, Islamic financial products, and regulations and legislations. In this paper, the researchers provide a comprehensive review of the literature on the conversion process into Islamic banking system. This paper discusses the concept of the conversion process and highlights the challenges and obstacles facing the conversion process into Islamic banking. Therefore, this paper shed a light on some major factors that may hinder the success of conversion process. To investigate key obstacle factors, this research sketched the issues from literature (research articles, existing survey findings, concepts) involved with conversion process, and the motivations were prompted the conventional banks to convert to Islamic banks. However, the main objective of this study is to investigate the factors that influence the success of conversion process from conventional banks to the Islamic banks and the motivations for this process. The study suggests that the conversion process should be looked at as a comprehensive process of all components of the economic and financial system. Conventional banks which that to convert to Islamic banks should follow the format for financial statements suggested by AAOIFI in general and shari’ah standard number 6 (conversion standard) in particular. More research is needed to determine the most important factors that influence the conversion process into Islamic banking. This paper is the first of its kind that provides a comprehensive and integrative critical literature review that can serve as a useful checklist for Islamic banking researchers and leaders in their quest of evaluating the conversion process from conventional banks to Islamic banking. Key Words: Conventional Banking, Conversion Process, Motivations of Conversion, Islamic Banking.

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