Profit and Loss SharingIn order to understand the main factors that contribute to the lack of profit sharing in Islamic banking, this mode of financing must first be introduced. The fundamental basis of PLS ​​is equity orientation. Such a method of financing allows all parties involved to share both risks and losses in proportion to their individual capital contribution, while profits are distributed according to an agreed ratio. This mode of Islamic banking guarantees sharing of profits or losses and does not ensure any fixed interest rate, which promotes the efficiency and stability of the Islamic banking system. According to one of the leading Sharia scholars, Muhammad Taqi Usmani, “The real and ideal financing instruments in Sharia are mudarabah and musharakah” (Farooq, 3: 1996). Mudarabah is a financing alternative in which two parties form a particular type of partnership. in which one partner provides the capital (rab-ul-mal) while the other conducts the management operations (mudarib). Any profit generated is allocated and shared based on a ratio agreed by both parties. The financier is the one who bears the loss, keeping in mind that the mudarib was not negligent (Al-Omar, Abdel-Haq, 1996).MusharakahMusharakah has certain characteristics of joint partnerships. It is described as a contractual relationship created by the mutual. agreement of the parties for the sharing of profits or losses in the context of a joint commercial activity. This type of financing involves an Islamic bank providing funds, which are mixed with the company's funds and any other operations. Capital providers are allowed to participate in management, but it is not obligatory...... middle of article...... [report] Research Division, Islamic Institute of Research and Development training. Møller, A. 2013. Where is the problem of adverse selection and moral hazard in Islamic finance?. [report] Alternative financial institutions. Saeed, A. 1996. Islamic banking and interests. Leiden [ua]: Brill. Santomero, A. M. 1997. Risk management of commercial banks: a process analysis. Journal of Financial Services Research, 12 (2-3), pp. 83--115. Siddiqi, M. 1983. Interest-Free Banking. Research in Islamic Economics, Volume 1, Issue 2. Ul Haque, N. and Mirakhor, A. 1986. Optimal Profit Sharing Contracts and Investment in an Interest-Free Islamic Economy. IMF Working Paper. Visser, H. 2009. Islamic finance. Cheltenham, UK: Edward Elgar. Warde, I. 1999. The Revitalization of Islamic Profit and Loss Sharing. [report] Cambridge: Center for Middle East Studies, Harvard University.