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Islamic banking depends on equity financing and conventional banking depend on debt financing. Is it right ?

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Question added by Rehan Rehan Nasir , Junior Internal Audit officer , Chemicals & Dyes
Date Posted: 2016/01/21
Duncan Robertson
by Duncan Robertson , Strategy Consultant , Duncan Robertson Consultancy

Not quite.   The critical difference is that conventional banking allows interest and Islamic banking does not.  Islamic banking does allow profit-sharing, which obviously looks a bit like equity.  However, equity has other components (e.g. voting rights and last place in a liquidation) which aren't necessarily shared by Islamic banking instruments.

Rehan Rehan Nasir
by Rehan Rehan Nasir , Junior Internal Audit officer , Chemicals & Dyes

 Duncan Robertson Sir,

I mean in sense of risk in investment of banks. Islamic banks having low margin than conventional because Islamic banks rely on his capital more than its customer deposits. Is it right sir? or clear my confusion .