Finance

Globalisation which has resulted to integration of economies saw the 2008 depression hit many countries worldwide. The crisis saw many financial institutions, some which seemed too big to ever fail collapse because of debt securitisation. The resulting crisis saw many non-Islamic financial institutions go bankrupt. Islamic   finance principles however strictly forbid the practice of debt secularisation. As a result, Islamic financial institutions as well as borrowers have remained unaffected by the crisis and the changes in the economy. In fact, Islamic banks have reported positive growth through this period of crisis. This study seeks to compare Islamic banking and non-Islamic banking based on their performance during in this time of change in the economy as a result of the global financialeconomic crisis. To achieve this, the researcher will explore the principles and concepts of Islamic banking, the performance of these banks particularly in the Middle East where they have the largest markets and compare these with non-Islamic (conventional) banking with regard to impact of the global economic crisis on their performance.

The study will use both primary and secondary data. Primary data (quantitative) will be collected by observing the financial reports of the banks to be studied while secondary data will be collected critically reviewing literature on prior studies covering similar topics. Introduction
Islamic banking is characterised by several features that are different from non-Islamic banks. The main feature of Islamic banking is that it is interest free (Ayub  2007). This is based on sharia law which prohibits against taking or giving interest. Non-Islamic banking system is on the other hand organised and operated on the basis of interest (a fixed payment). Islam considers charging of interest an exploitative practice as it maintains that it is unfair to charge interest on those who are compelled to borrow so as to meet their essential requirements. Other distinct features of Islamic banking include sharing of profits and losses, implementation of Zakat, which is a compulsory tax, paid in Islam, avoiding speculations when conducting transactions (gharar) and not being involved in businesses that are considered illegal in Islamic (Various authors 2009). There has been an increase in the activity of financial institutions. Understanding the differences in performance of banks presents investors with a clear picture of which banks to trust with their resources. So far there is no study that has done a direct comparison between Islamic and non-Islamic banking. This is a gap that ought to be addressed

Research Questions
The following research questions will be analysed in the study to help address the main research question which is to determine whether Islamic banks perform better than non-Islamic banks
Are Islamic banks more sensitive to changes in the economic environment than non-Islamic banks
Are Islamic banks more appreciative of customer relationship management than non-Islamic banks
Do Islamic banks have stronger human resource management strategies than non-Islamic banks
Are Islamic banks more profitable than non-Islamic banks

Aim
The main aim of this paper is to compare Islamic banking with non-Islamic banking in terms of performance. Performance will be measured by evaluating the sensitivity of both banks to economic changes such as the ongoing global financial crisis. The study will also explore the features of Islamic finance and establish the role they play in protecting these banks and their investors during times of economic change such as the current global financial crisis.

2. Relation to Previous Research
Islamic finance which comprises of Islamic banking and insurance as its branches is said to be performing and growing at a remarkable rate of double digits (Alexakis  Tsikouras 2009, 100-103). Though this growth is most noteworthy in Arab Muslim markets, the potential of these institutions have had impact in non-Islam markets as well (Abdouli 1991, 55-62). This growth is attributed to the increasing engagement of Western regulators and credit rating agencies in Islamic finance (Wilson 1997, 1340). There has been an increase in the demand of ethical products since the 1970s leading to the growth of these banks as they offer ethical investment unlike the conventional banks (Khan  Bhatti 2008, 708-725).

Banks are defined by divergence and convergence in different aspects of banking. Commercial banks irrespective of whether they are Islamic or non-Islamic have to generate profits and value to their stakeholders. This implies that banks have a common purpose though Islamic and non-Islamic banks are defined by differing approaches to attaining this goal. Porter and a host of other business strategists have repeatedly pointed to the importance of designing internal operations in a manner that aids generation of sustainable competitive advantage thus value (Wit  Meyer 2010). Evidently, any difference in performance between Islamic and non-Islamic banks may be a manifestation of differences in their internal systems (Wit  Meyer 2010). Analysis of approaches to customer relationship management, interaction with stakeholders, profitability and reaction to change in the external environments may provide pointers to efficacy of internal mechanisms and therefore differences in performance. However, no study has so far taken this approach to analyzing the performance between non-Islamic and Islamic banking institutions. Evidently, there is a gap in the existing knowledge that ought to be addressed to improve both Islamic and non-Islamic banking.

3. Methodology
3.1 Data Collection
3.1.1 Primary Data
This study seek to explain  how Islamic and none Islamic banking compare in terms of performance particularly in times of economic changes such as the ongoing global financial crisis. The main data collection method that will be used in this study is observation. The primary source for this study will be annual the annual reports of one major Middle Eastern Islamic bank and one major conventional bank of the researchers  choice. The researcher chose this method because it is cheaper and less time consuming. Observation also reduces chances of biases and errors as data is derived from the data. It reduces chances of the researcher imposing results. As such, it is more inductive.

3.1.2 Secondary Data
To increase the validity of the results collected from the primary data, the researcher will also use secondary data that will be collected by reviewing and critically appraising articles on reports from prior studies on similar topics. Published case studies will also be reviewed. Data will be collected from peer reviewed journals, financial newspapers, books and databases. To achieve this, the researcher will prepare a list of key words on the topic and carry out a search in online libraries such as Ebsco, ProQuest and Questia. The contents of the obtained articles will be analysed for their appropriateness and relevance to the research question. The contents will be interpreted and analysed together with their implications. These will then be presented in the paper in a proper and logical order.

The researcher chose to incorporate secondary data because of its economical advantages in that it is faster and cheaper to conduct. If well analysed, secondary data can give results that are more detailed than primary data as it involves comparing different results and coming up with a conclusive answer. This method is however risky as the researcher is not able to establish the errors that were committed and their impact on the results. This could compromise the adequacy and accuracy of the data hence its validity and reliability. That why the researcher chose to combine both secondary and primary data.

3.2 Sampling
Strategic sampling will be used to select the banks to be studied. The researcher will only select those banks that meet the standards he will have come up with. Though this method is non-probability hence data derived from it can not be generalised to all the banks in each sector, it is less time consuming.

3.3 Data Analysis
Data will be analysed statistically. The researcher will use graphs and tables to illustrate the results.

4. Reflection
This study will require the researcher to study countries that far away from the UK such as Saudi Arabia and UAE where Islamic banking is doing very well. This presents a problem in accessibility of the subjects. It will also be quite expensive to conduct the primary research as the researcher needs to hire research assistants to help in collection of data and also cater for transport charges. Time might also be limited as the study requires collection of qualitative data which is time consuming to collect and analyse. Collecting quality secondary data will also require the researcher to access and review as many articles as possible which can be quite expensive and time consuming. Using secondary could also compromise the validity of the data as the researcher can not tell exactly how well the data was collected and if any errors that have an adverse effect on the findings were collected. Comparing findings from various authors and data from the primary study will however address this issue.

To avoid any ethical issues, the researcher will seek letters of consent from the university as well as the banks that allow him to conduct the study. The purpose of the study and how the data will be stored will be explained. Written and informed consent will also be sought from the participants before allowing them to participate.

Determining the theoretical framework to use in this study is also not easy. This is because this topic is characterised by several theories. Literature on Islamic and none Islamic banking is constructed on several theoretical backgrounds which makes it difficult for the researcher as the approach to the topic varies depending on the theory being used.

The findings of this study might also have some political and religious implications. The researcher might recommend adoption of Islamic modes of financing depending on the results that will be obtained. This might not go well with those who do not practice Islam as they might feel that the sharia law is being imposed on them. The researcher will therefore advocate for inclusion of these modes but not compliance with the Sharia law-based. The researcher will frame the recommendations in a way that allows readers to take an open-minded approach even as they try to understand the impact of Islamic banking and its economic potential.

Conclusion
This research study seeks to compare the Islamic and non-Islamic Banks. The study will concentrate on the performance of the two institutions. The researcher will measure this performance by investigating how the two have faired in the ongoing global economic crisis. To achieve this, the researcher will conduct case studies on banks in each of the two sectors.

Literature and findings of prior research reveal that Islamic banking is safer and has shown good performance, remaining unaffected by the global financial crisis that left many non-Islamic banks such Lehman Brothers bankrupt. This is attributed to good management of resources and regulation which is not present in conventional banking. In this study, the researcher seeks to investigate this argument and make conclusions as well as recommendations at the end based on the findings on the mode of banking that is showing better performance and stability even in times of economic change.