Impact of the Financial Crisis on Islamic Banks

Abstract

This study aims to elaborate a new vision of financial stability, which is a leader in all the current debates among the institutions concerned in the global financial field. Thus, the subprime crisis has shaken the foundations of the financial system, hence the existence of new norms of financial globalization. Also, the crisis is a phenomenon of reversal of the economic cycle at its highest point. This fact interrupts the period of expansion and accelerates the depression of the economy. For this reason, our study is mainly based on the financial stability of Islamic banks compared to commercial ones. In other words, we try to clarify the impact of the subprime crisis on the economic and financial profitability of Islamic banks on the basis of actual data from a sample of Islamic banks in the Al Baraka group. The empirical study is based on the estimation of the model, the stability test of Chow and CUSUM for the period 2003-2009. The results show that the level of performance of the banks of our case is more or less dispersed and particularly to the level of economic profitability. For the tests of the comparisons of the averages and the variances that, for our case, only the economic profitability appeared to have a significant change at the level of average and volatility.