David G. Mayes

This paper theoretically discusses and reviews the main causes of the crisis, including discrimination, moral failure, poor governance, easy credit, imprudent lending, excessive debt and leverage, and regulation and supervision failure. The implications of the crisis have been reviewed, followed by a critical discussion on the lack of direct exposure to the crisis for Islamic banking, because most, if not all, of the practices and financial instruments that are believed to be responsible for the crisis are not permitted under Islamic banking principles.