Islamic Banks, Conventional banks and Subprime Crisis: Empirical Evidence by Using DEA Approach

The bad trails left by the financial crisis led many researchers to propose an adequate remedy to ensure financial stability. It is integrated in this framework paper from which we will be testing the resistance of the Islamic bank before, during, and after the period of the subprime crisis (2003-2012). To find out if Islamic finance is a real driver of financial stability, by making a comparison between the two industries, we will use the Data envelopment analysis method (DEA) by integrating a new input "Interest expense". The results do not confirm totally on one of the previous works, nor reject them, since they support the work who says that Islamic banks have kept their stability during the crisis. But those results did not agree that conventional banks are affected by the subprime crisis.