The prohibitions of interest rate as well as the lack of a dedicated infrastructure and adequate instruments prevent the Islamic banks from developing a viable value proposition: rejecting leverage and speculative transactions, Islamic banks need to have greater amount of capital and to sustain a higher liquidity ratio than their conventional counterparts.
During the crisis, we have observed strong negative spill-over effects across euro area countries and between the banking sector and its respective sovereign. National supervisors and Treasuries are also confronted with the well-known problem that during good times, large banks work as European institutions but in bad times fall on national shoulders.