The effects ofglobalfinancial crisis on Islamic banking industry

Islamic banks as the most important financial institution in Islamic countries have organized their activities based on shariah-compliant principles. The goal of this research is to study the performanceof the Islamic banks and theeffectsthat they may show from the global financial crisis in 2007. Because of the nature of the recent crisis is due to the lack ofdisciplinein theconventional financial institutions, the impact of the crisis on financial institutions can be a benchmark on the performance of these institutions.
The statistic society of the research consists of all Islamic banks which act in the world. Also, the research sample is the data and financial reports of 71 banks that are studied, based on this sample size.Paired t-test is used to compare the theoretical model ofthe study in appraisalperformance of banks (11 key performance indicators). To test the case, the years 2005, 2006 and 2007 as the period before the crisis and years 2008 & 2009 as the time period after the crisis werestudied. The result of the research showsthat there is no significant difference between the averages in the period before and past crisis for all the used performance indicators.In other words, this study showed that the performance of Islamic banks is not affected by the recent financial crisis.Operating based on principles of Islamic financial system and using the current instruments in this system are the major reasons of not being effected.