The following thesis aims to uncover the effects of financial crisis of 2007-2008 on both Islamic banks and Conventional banks by looking at profitability, efficiency, liquidity, and capital adequacy. 28 Conventional banks and 19 Islamic banks across a sample of six countries Saudi Arabia, the United Arab Emirates (UAE), Kuwait, Qatar, Bahrain, and Malaysia have been considered. Two analysis methods, namely financial ratios analysis and panel data regression method for Z-score model have been used in order to have a comparative analysis for the impact of financial crisis on the performance of two type of banks during a four-year period 2007- 2010. The main findings of this thesis indicates that both of the Islamic bank and the Conventional bank have been affected by global financial crisis to some extent. The t-test suggests that the Islamic bank is more profitable during the post-crisis period compared to the Conventional bank and has higher liquidity. On the other hand, conventional banks are more leveraged than Islamic banks. Moreover, by using the Z-score to evaluate the stability of banks, the regression result shows that the Islamic bank performed better during the 2007-2008 financial crisis compared to the Conventional bank.