The role of Islamic finance in achieving financial stability : an empirical study on members of ifsb during the period 2000-2009

الملخص EN

This paper has been designed to search the rôle of Islamic finance in achieving Financial stability.

So that it tries to answer the question whether Islamic banks loans can lead to financial stability or not? Hence the study aims to confirm prior studies about crédit risk in Islamic banks, and find out new theory in Z score as financial predictor for Islamic finance.

It follows a quantitative method by using sample standard déviation, Pearson corrélation factor, and linear régression.

The IFSB members sample consists of full fledge Islamic banks, over nine countries are chosen, with time sériés from 2000— 2009.The data has been collected from IFSB website, and individual bank websites.

The empiricai analysis, conducted in this study demonstrates: Islamic banks' lending doesn't include high crédit risk (standard deviation=.03, variance=.0()l ); positive relationship bclween Islamic finance and Z score.

Based on these findings, the study recommends that Islamic banks should increase investment rate of retum on loans, and retained eamings.