This study deals with the Islamic financial system and investigates the financial instruments
utilized in it. Apart from the problems related to the prohibition of interest the suggested
concept for the Islamic financial system could not be applied in practice. Profit and
Loss-Sharing instruments have been utilized on a small scale so far and it would be very
difficult to increase the attractiveness of these financial instruments without easing Islamic
legal restrictions or at least reconsidering relevant issues from both the Islamic
socio-economic and ethical viewpoint as well as the position of conventional finance. An
improvement of efficiency may not be possible without taking a fresh look at Islamic
injunctions while considering at the same time contemporary financial realities and needs such
as investment opportunities risk diversification and regulatory issues.
