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Regarding the rate of profit and loss sharing – i.e. the "agreed upon percentage of the profits (or deduction of losses)" the Islamic bank takes from the client – there is no market to set it or government regulation of it. This leaves open the possibility the bank could exploit the client with excessive rates.
From the point of view of depositors, "Investment accounts" of Islamic banks – based on profit and loss sharing and asset-backed finance – play a similar role to the "time deposits" of conventional banks. (For example, one Islamic bank – Al Rayan Bank in the United Kingdom – talks about "Fixed Term" deposits or savings accounts). [352]
While the original Islamic banking proponents hoped profit-loss sharing (PLS) would be the primary mode of finance replacing interest-based loans, [56] long-term financing with profit-and-loss-sharing mechanisms is "far riskier and costlier" than the long term or medium-term lending of the conventional banks, according to critics such as ...
The industry has been praised for turning a "theory" into an industry that has grown to about $2 trillion in size; [6] [7] [8] for attracting banking users whose religious objections have kept them away from conventional banking services, [9] drawing non-Muslim bankers into the field, [2] and (according to other supporters) introducing a more stable, less risky form of finance.
Conservative scholars promoting Islamic finance consider murabaha to be a "transitory step" towards a "true profit-and-loss-sharing mode of financing", [16] and a "weak" [17] or "permissible but undesirable" [18] form of finance to be used where profit-and-loss-sharing is "not practicable."
Its different annual editions have been sponsored by major financial institutions like Dubai Islamic Bank, CIMB Islamic, Commerzbank, ITS, Hong Leong Islamic Bank, Abu Dhabi Commercial Bank, National Commercial Bank, and others. GIFR 2014 was launched at the Global Donors Forum held at Washington, D.C., on April 13–16, 2014.
Despite this "rebooting", Khan states that the new, purified, full-fledged Islamic banks are the same in "form and function" as the old Islamic banks, and that eleven years later (as of 2013), use only a minuscule amount (3%) of profit and loss sharing, and make up only about 10% of the country's banking sector. [398]
Iran has 36% of the worldwide assets of the participation banks, Malaysia has 17%, Saudi Arabia has 14% and Turkey has 3.1% of the [clarification needed] market share. [ citation needed ] According to Ernst & Young , the assets of global participation banking reached US $930 billion in 2015, with growth rates declining across all regions ...