Alexandria Journal of Accounting Research second Issue, May, 2020, Vol. 4 Financial Performance Comparison of Islamic and Traditional Banks in Emerging Markets Dr. Menan Etab Lecturer in Accounting and Finance Department Dr.Racha El-Moslemany Head of Accounting and Finance Department College of Management and Technology -Arab Academy for Science,Technology and Maritime Transport Abstract Purpose – This study aims to investigate the performance differences of Islamic and traditional banks in Egypt by using financial ratios. Design/methodology/approach – This study analyzed 2 Islamic and 9 traditional banks for the periods of 2002-2010. Descriptive statistics and paired sample T-test were performed. Secondary data was obtained from the annual financial reports of the banks for the period under the study. Findings – The performance of the Egyptian traditional banks shows su- premacy and dominance over the performance of the Egyptian Interest free banks. The capital adequacy ratios, profitability level, quality of management, and liquidity proved to be significantly better for traditional banks. While the results of the study concerning the quality of assets showed no significant dif- ference between Islamic and traditional banks. Research limitations/implications – The major limitation of this paper is the sample size that may be judged to be small and this is due to the fact that this study is based on assessing the performance of the only two fully fledged Interest free banks operating in Egypt during the period of study. Moreover, Egypt is a distinctive case compared with other Muslim countries when it