Islamic finance has shown a greater degree of competitiveness during the financial crisis and it had affected globally. The Islamic Finance industry has seen a remarkable double digit growth in the past. The study is an attempt to evaluate the relationship between the level of effectiveness of the Islamic Banking System in the Kingdom of Bahrain and its relationship to competitiveness in the global banking industry. It studied the level of effectiveness of the Islamic Banking system and its competitiveness in the global industry in terms of business service expansion, pricing transactions, equity funds management, investment approach, business performance and found out the problems affecting this industry to attain a quicker and transparent solution to Islamic finance through Shariah way. We surveyed 100 respondents from different Islamic banks and were asked them to rate the operators on the basis of certain criteria and to express their levels of relationship between the level of effectiveness of Islamic banking system in Bahrain and its competitiveness in the global industry. Their responses were analyzed and certain conclusions arrived at using weighted mean scores, Standard Deviation and Correlation. It showed a highly significant relationship between the effectiveness of the Islamic banking system and the competitiveness in the global banking industry. The Islamic Banking system has to improve its effectiveness of the system to achieve competitiveness through innovative strategies and products and services.

competitiveness, Islamic Banking system, global network