The Islamic finance industry in Malaysia has been in existence for over 30 years. The promulgation of the Islamic Banking Law of 1983 enabled the creation of the country's first Islamic bank. Malaysia's long experience in building a successful domestic Islamic financial industry for over 30 years gives the country a strong financial position which adds to the richness, diversity and maturity of the financial system. (Rosnia Masruki, 2010). Before the advent of Islamic banks, the financial market was the monopoly of conventional banks. However, in recent years, Malaysian Islamic banks have had to operate in an increasingly competitive environment. Alongside the conventional banking system, the Islamic banking system has gradually evolved to become a major player in the Malaysian financial landscape. The establishment of Bank Islam Malaysia Berhad (BIMB) in 1983 truly marked the beginning of a new era in Islamic banking in Malaysia. The Islamic banking system received a new boost through a system allowing conventional banks to open windows for Islamic banking products called interest-free banking system. (Mariani Abdul Majid, 2003). However, the world has experienced several financial crises throughout history, particularly in the 20th century, since the Great Depression of the 1930s, followed by the surge in oil prices in the 1970s. Apart from these major crises, many Smaller crises have occurred in the economy, which is normal given the cyclical nature of the economic system in terms of economic output, inflation rate, GDP level, trade and other factors. Yet it does not happen in every cycle, or recession, that so many factors coexist at the same time, shaking the global economic system as much as happened during the last crisis that began in 2007 -2008. (Renata JankaT...... middle of paper ......-free nature. Since the development of Islamic banks in Malaysia, it is imperative that Islamic banks play their role effectively and efficiently to contribute to the overall stability of the financial system, growth and development of the economy and less effective during the global financial crisis The questions that arise are whether Islamic banks are able to survive in the Malaysian economy, as well as. their performance and stability. The question of Malaysia during the financial crisis remains Although it is questionable in a volatile financial environment, would Islamic banks in Malaysia be able to withstand the financial crisis? This raises the need. to undertake this research to examine these performance and stability issues. There are several reasons for this. Islamic banks can survive the financial crisis in terms of performance and stability..