Immunity Of Islamic Banks from Global Financial Crisis

ABSTRACT

The study aims at evaluating the performances of the Islamic banks and the conventional banks before, during and after the global financial crisis. Variables that were used during the cause of the research include profitability performances, liquidity performance and credit risk of the various banking institutions. The study covers a period of five years 2006-2010. The study adopts the sample of 3 Islamic banks and 3 conventional banks from UAE, Bahrain and Britain. The study documents the findings that there is no significant difference between the Islamic banks and the conventional banks performances. However, the Islamic banks tend to be less risky and solid during, before and after the crisis due to the narrow scope of financial participation in risk management as against the conventional banks ethics where the concept of risk management is the order of the day.

TABLE OF CONTENTS

Title page ………………………………………………………………………………..i

Dedication……………………………………………………………………………….ii

Approval page……………………………………………………………………..........iii

Acknowledgement………………………………………………………………..…….iv

Abstract…………………………………………………………………….……………v

Table of Contents……………………………………………….……………………..vi

Chapter One: Introduction

1.1 Introduction………………………………………………………..……..……….1

1.2 Background of the study……………………………………………..…………..2

1.3 Statement of Research Problem…………………………………………………3

 1.4 Objectives of the study……………………………………………………….....4

 1.5 Research Hypothesis……………………………………….…………………..4

 1.6 Scope of the study………………………………………………………… ….5

1.7 Limitation of the Study………………………………………………….……6

Chapter Two:     Review of Literature

 2.1Introduction………………………………………………………….…….…7

2.2 Review of literature……………………………………………………….…7

 2.3Root and primary cause of the crisis………………………….……….….11

2.3.1 The subprime mortgage crisis ……………………….…….……………12

2.4The Islamic financial system……………………………….………….…..13

2.5 Operational differences between Islamic and conventional banks……..16

2.5.1 Musharaka……………………………………………………….……....17

2.5.2 Mudaraba…………………………………………………………….....18

2.5.3 Murabaha…………………………………………………………….....19

Chapter Three: Research Methodology

3.1 Introduction…………………………………………………………….21

3.2 Research Design………………………………………………………...21

3.3 Population and sample of the Study………………………………….…22

3.4 Methods of Data Collection…………………………………………….22

3.5 Data analysis technique………………………………………………….22

3.6 Sampling Techniques and Sample size…………………………………48

3.7 Data Analysis Method……………………………………………………9

3.8 Variables definition and measurement………………………………..…26

Chapter Four: Data presentation, analysis and interpretation

4.1 Introduction………………………………………………………………27

4.2 Data presentation……………….……………………………………….27

4.3 Descriptive statistics ……………………………………………………31

4.4 Regression Results………………………………………………………34

4.5 Summary of the findings……………………………………………..…55

Chapter Five: Summary, conclusion and recommendations

5.1 Summary…………………………………………………………………..58

5.2 Conclusion ………………………………………………………………..59

5.3 Recommendations……………………………………………………….60

References….………………………………………………………………70

Appendix……………..……………………………………….……………74