Financial stability of Islamic Banks in gcc region during the subprime crisis : an empirical analysis

Abstract EN

This study aims to identify the financial stability for Islamic banks in Golf Council Countries during the subprime crisis; to address the question if the financial stability of Islamic banks were more than the conventional banks in GCC.

For this our study opted for an empirical analysis using daily data of the equity prices of both types of banks, this myth utilizing GARCH (1-1) model by studying the volatilities of returns that was used to measure the financial stability of the two types of banks.

The results of this study show that the total of the coefficients ARCH and GARCH of Islamic banks were less than the conventional banks during the crisis; we conclude that the Islamic banks enjoy financial stability more than traditional banks during the crisis.