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The aim of our study is the comparative analysis of the Islamic and conventional bank systems in Turkey focusing on the years of the last financial crisis. The financial crisis of 2008 shocked the world and impeached the confidence in the conventional bank systems. It drew the attention to the alternative financial forms like Islamic banking. The best known specialty of the Islamic bank system is the prohibition of interests and speculative transactions. The question is: are Islamic banks more crisis-resistant than the conventional banks? Are they really more stable? We would like to get answers for these questions through analyzing the four Islamic banks and four conventional banks with the same size in Turkey. We set up three hypothesizes: 1. The profitability of the Islamic banks was higher during the crisis than the profitability of the conventional banks. 2. The liquidity of the Islamic banks was higher during the crisis than the liquidity of the conventional banks. 3. The leverage ratio of the Islamic banks was higher during the crisis than the leverage ratio of the conventional banks. The time horizon of the research is from 2007 to 2013 and we get the data from the annual reports of the banks. 1 The Islamic Banking System in General French and English investments helped the Islamic banking system to be born during the colonization. The first banks were parts of the colonial banking system and the first banks were the Ottoman Bank and the Bank of Persia. The Ottoman Bank was founded in Turkey by French and English investors, while the Bank of Persia was founded in Iran by English investors. That time the Muslims wanted to found a bank on their own, but they faced some difficulties, mainly the technique of interest, that is against the Sharia law. The solution was the Islamic banks let the European financial experts take part in the bank system. That was the way how Islamic banks has born (YousefiKóbori, 2013). The Islamic bank system is based on the five principles of Saria. These principles are obligatory for all of the Islamic financial institutions: 1. The prohibition of interests. 2. Paying zakat. Zakat means solidarity tax. As banks have high incomes, that’s why they have to pay solidarity tax (Varga, 2013). Prophet Muhammad introduced this taxi in order to maintain the community and decrease the wealth inequalities. Who has significant property has to pay this tax. The amount of the tax is 2,5% of the property (Yousefi-Kóbor, 2013). The zakat should be paid in every 355 days, which means one lunar year (Falus, 2014). 3. Transactions against the principles of Islam is forbidden. That’s why Islamic banks can’t finance alcohol, weapons or gambling (Pálfi, 2010). 4. Islamic banks have to avoid transactions with high risks such as speculative transactions (Pálfi, 2010). Every transaction has to be evaluated individually in order to avoid high risk taking. We can’t find standardized transactions in the Islamic banking system. There is a special relationship between the bank and the customer, we call it profit and loss share (Balázs et al, 2014). 5. The last principle is profit and loss sharing. The bank and the customer determine in the contract the amount of profit and loss that they will bear (Pálfi, 2010). 2 The Turkish Bank System The Turkish banking system can be divided into three parts: commercial banks, investment banks and Islamic banks (Tálos, 2015). The Islamic banks had the 7% of the assets of the Turkish banking sector in 2012 (ey.com, 2014). The Turkish Islamic banks had stable growth path since 2000, when they had only the 2% of the Turkish bank sector. The whole Islamic banking capital reached the 60 trillion dollar worldwide which is a significant result. The Islamic banks had 966 branches in Turkey in 2014 which is higher by 40% than in 2011 (herdem.av.tr, 2014). Recent surveys show that Islamic financial sector will have a bright future, because: – increasing number of Muslim customers, – the Turkish state supports the sector, 126 INTERNATIONAL CONFERENCE ON EURASIAN ECONOMIES 2016 – increasing number of small and medium-sized enterprises who are interested in Islamic finance, – a fifth Islamic bank, Ziraat Bankasi was opened in 2015 and they are planning to open another one (Turkey Islamic Finance Report, 2014). 3 The Comparative Analysis of the Islamic and Conventional Bank System in Turkey We would like to prove that the Islamic banks are more crisis-resistant than the conventional banks in Turkey. We use ratios suitable for examining this, such as profitability ratios (Return on assets –ROA, Return on equityROE), liquidity ratio (IAR) and leverage ratio. On the first diagram we signed the Islamic banks with green as green is the colour of Islam. We constructed the average of the bank sectors by weighting the total amounts of the balance sheets. This way we got a more detailed picture. The calculation based on the annual reports of the banks. The time horizon is 2007-2014. 3.1 The Analysis of Profitability The profitability shows how effectively the bank operates. ROE calculates how many dollars of profit a company generates with each dollar of shareholders' equity. The healthy percentage of ROE is 10-12%. Figure 1: Average ROE of the Two Banking Systems Source: Own Calculation Based on the Annual Reports of the Banks We can see that ROE of the conventional banks started to decrease in the financial crisis, while there is no similar decrease in the Islamic banking sector. There is a decrease by 12% during 5 years in the conventional banking sector. We can see a decrease of 9% during 6 years in the Islamic banking system. But on the other hand, both sector reached the healthy limit of 10%. The ROA ratio measures how efficiently a company can manage its assets to produce profits during a period. The healthy limit of ROA is between 1 and 2 (Tálos, 2015). Figure 2: ROA of the Two Banking Systems Source: Own Calculation Based on the Annual Reports of the Banks 0 5 10 15 20 25 2007 2008 2009 201