The conventional banking systems across the world have all been affected by the current global financial crisis. The Islamic banking system has not remained impervious; however, they have been more resilient. The literature indicates that the demand for the Islamic Financial system across the world is increasing due to its risk sharing mode of operation. This paper examines the causes and the effects of the financial crisis across the world and in the Middle East in particular. It also scrutinizes the extent to which the Islamic Banks in Jordan can avoid or mitigate the effects of this pernicious global financial crisis with its fiscal instruments like: ‘Mudaraba' (managed profit and loss sharing partnership/trust financing), ‘Musharaka' (profit and loss sharing partnership), ‘Murabaha'(cost-plus financing) and ‘Ijara' (lease-to-own). The hypothesis for the study has been developed on the basis of previous research and the particular idiosyncrasies of the global financial crisis. The study indicates that the ‘interest rate' and ‘excessive lending' are the primary factors of the fiscal crisis in the country. The empirical findings suggest that the fiscal instruments of Islamic banking such as Mudaraba, Musharaka, Murabaha and Ijara provide a robust immunity for the Islamic Banks during such a financial crunch