Abstract:
Objective of the study
The objective of the study was to think about what are the impacts of the global financial crisis on Islamic
banking system and how Islamic bank spared from the current global financial crisis. To identify with the
issue some important sub questions were investigated such as the differences between Islamic and
conventional banking model, modes of financing by the Islamic bank, differences in corporate governance
and how Interest-free banking system works in all purpose.
Data and research method
For the theoretical part of the research, books, academic research papers and organization’s homepages were
used as sources. The empirical part of the study is a qualitative and is based on open-ended questionnaire
complemented with semi-structured interviews from two fully sharia compliant Islamic and two
conventional bank’s Islamic window managers who make investment decisions in their banks. The studies
are qualitative and expressive in nature and examine how things are rather than suggesting how things
should be. All 6 senior Islamic bank managers have been interviewed.
Results
The results indicate that Islamic banks are more flexible than conventional banks in the face of the global
financial crisis. Because modes of financing and corporate governance of Islamic banking are different from
those of conventional banking, these help the IBs to spare from the current global financial crisis. factor that
enable the Islamic banks to secure form crisis were seen as asset backed financing; avoiding speculation and
debt selling; avoiding invest in toxic assets and the use of profit and loss sharing mode of financing.
