Abstract:
This study is designed to examine the Impact of Islamic banks ' practices on
the financial crisis probability. Some economic experts accused financial
system as hole, and especially banks panics of causing international financial
crisis .Therefore, this study is designed to investigate whether Islamic banks
practices can creating financial crisis or they are protected from financial
crises. The aim of this study hence is to discover new theory in relation
between Islamic finance and financial crisis probability, also to investigate the
causes of international financial crisis in the Islamic banks. to reach this aim a
fulfilled in the IFSB members are sampled including fifteen banks provide
only Islamic finance window over nine countries with time series from
2000—2009. The data is collected from under study banks' published
annual reports. The study follows historical and descriptive methods. Sample
mean, standard deviation, correlation, regression,T-test and Z score predictor
model for crisis are used. The empirical analysis, conducted in this study
demonstrates: Islamic banks have sufficient liquidity ratio; but they haven't
sufficient profitability ratio; their lending doesn't include high credit risk
(standard deviation=.03, variance=.001); Islamic banks are not protected from
financial crisis ( the mean Z score for sample =2.13). Based on these findings,
the study recommends Islamic banks should increase investment rate of
return, and retained earnings; IFSB should increase tier 1 capital ratio by
more than 7% as increase than that state by Basel