ISLAMIC FINANCE: Why Islamic banks must offer a cushion against collapse

Avoidance of excessive speculation and leverage has seen Islamic institutions emerge from the sub-prime and credit crises in better shape than many conventional counterparts. Yet it doesn't follow that they are inherently more sound. Their theory of an equal sharing of risk is yet to be tested by a bankruptcy, while Islamic credit and risk assessment is still in its infancy. Few doubt there is room for improvement, reports Chris Wright.