The economic crisis: impacts on Islamic banking operations

Abstract

The banking crisis in Malaysia today saw the establishment of Danaharta and Danamodal to ease the problems of bad loans and depleting capital in the local banking firms. To what extent Islamic banks represent the beneficiaries of these rescue efforts can best described how the severity the crisis have impacted Islamic banking' performance. Other than that it is relatively difficult to gauge how the crisis have affected its performance or ability to provide continuous financing facilities to business and consumers. This is because, the market size of Islamic banking today is only marginal. It has yet to capture 5% target of the deposit market while market share of financing is less than 2%.