Framing external environmental dimensions as institutional constraints on adopting Islamic financial transactions: empirical evidence from: Libyan commercial banks
International Journal of Ethics and Systems
ISSN: 2514-9369
Article publication date: 9 January 2024
Abstract
Purpose
The purpose of this study is to frame the dimensions of the external institutional environment, namely, cultural-cognitive, normative and regulative dimensions as the main actors in the organisational field. More precisely, Libyan commercial banks have been identified as empirical evidence, to identify constraints of the institutional environment governing the behaviour and decision-making of commercial banks, when adopting Islamic financial transactions.
Design/methodology/approach
A questionnaire has been designed for 14 Libyan commercial banks which is distributed to the Board of Directors, managers, directors of departments, and personnel. The exploratory factor analysis (EFA) and the measurement model by using the first-order and second-order confirmatory factor analysis (CFA) have been applied as essential steps to embody the conceptual framework and test the research hypotheses.
Findings
The results of the EFA indicated sufficient correlation among the dimensions of the external environment. The CFA supported this study’s hypotheses. The modelling showed that the cultural-cognitive, normative and regulative dimensions are institutional constraints impeding Libyan commercial banks’ adoption of Islamic financial transactions. Interestingly, the findings of the CFA align with the EFA findings in supporting the conceptual framework of the research. They portrayed that the cultural-cognitive dimension has been identified by explicit and implicit cognition.
Originality/value
This study systematically embodies the dimensions of the external institutional environment, namely, cultural-cognitive, normative and regulative dimensions, as the main factors in the organisational field to be conceptually rich lenses to investigate social considerations to reinforce institutional thought broadly. The results of this study were consistent with extant Islamic financial literature, reflecting symmetry and similarity across commercial banks, particularly at the first stage of adopting Islamic financial transactions.
Keywords
Acknowledgements
The authors would like to thank and acknowledge the help of all the Emerald Insight workers who were involved in this project and, more specifically, the reviewers who contributed their time and expertise to this paper. They took part in the review process, as well as their insightful suggestions and careful reading of the manuscript. Without their support, this paper would not have become a reality.
Citation
Bin Idrees, S., Alhabshi, S.M., Sharofiddin, A. and Othman, A.H.A. (2024), "Framing external environmental dimensions as institutional constraints on adopting Islamic financial transactions: empirical evidence from: Libyan commercial banks", International Journal of Ethics and Systems, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOES-01-2022-0006
Publisher
:Emerald Publishing Limited
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