Libya is a country that is located in the northern part of Africa, it is mostly dominated by Muslims as such the laws of the country are bent on the Islamic religion. Sharia based banks all over the world are in front of a number of challenges, and Libya cannot be excluded. Islamic banks are still not well-devised in its mechanism because banking without interest that could provide funding in the short term and are faced with the problem of financing of consumer loans and the government deficit. All Sharia based Libyan banks have resorted to financing that delivers a predetermined return on investment to avoid the increased risk of short-term financing, and then the banks have only changed the name of their transactions. Banks that are based on the Sharia do not have the support of the central bank of Libya, and a lack of trained staff to choose.
History and development
Basically the ides of changing commercial banks to Islamic banks was instituted in the 20th century The development of the banking system is a key objective and it must be treated with great importance in the present as an issue that is crucial in the future of the economy, so we can not activate the role to be played by the State and its various institutions, particularly the Central Bank to activate this development as create a legislative environment to suit the latest developments in international banking, especially in light of globalization and global economic liberalization. basically the development of Islamic banks have met a stunted growth in Libya, reasons being that these banks are founded with the idea of non interest service facilities.