REGULATING THE CONVERSION OF CONVENTIONAL BANKS TO ISLAMIC: THE 4 QUADRANTS CONVERSION (4-QC) FRAMEWORK

Suleiman Sani Dalhatu (), Ashurov Sharofiddin () and Mustapha Abubakar ()
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Suleiman Sani Dalhatu: Islamic Development Bank Group
Ashurov Sharofiddin: Institute of Islamic Banking and Finance (IIBF)
Mustapha Abubakar: Ahmadu Bello University Zaria-Nigeria

Journal of Central Banking Law and Institutions, 2023, vol. 2, issue 2, 327-346

Abstract: This research paper proposes a framework for converting conventional banks to full-fledged Islamic banks as a catalyst for propelling the Islamic finance industry to Islamic Finance 2.0 by addressing the paucity of a regulatory framework for Central Banks to regulate this conversion. To address this, the paper proposes the “4Quadrants Conversion (4-QC) Framework†as a model framework for Central Banks to regulate the conversion process, consisting of twenty-four components classified into four quadrants. The proposed conversion involves leaving Shari’ah non-compliant activities and adopting Shari’ah permissible alternatives. This paper adopts a qualitative research method based on content analysis. The research findings suggest that the proposed regulatory framework can facilitate the successful conversion, resulting in a dual result of creating new Shari’ah-compliant entities and eliminating non-compliant entities. The proposed regulatory framework can also guide banks to plan, implement, and self-assess their progress to ensure a timely and less cumbersome conversion.

Keywords: conversion; transformation; regulatory framework; Islamic bank; conventional bank (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:idn:jclijn:v:2:y:2023:i:2f:p:327-346

DOI: 10.21098/jcli.v2i2.158

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