<![CDATA[Purpose: Islamic banking theory predicts that systems financing through Profit and Loss Sharing (PLS) are more resilient than mark-up-based systems, since losses are absorbed rather than transmitted to borrowers, but this has never been tested at system level for lack of cross-jurisdictional data. Methodology:Using the Islamic Financial Services Board’s (IFSB) Prudential and Structural Islamic Financial Indicators (PSIFIs) database, this study extracts financing data based on Sharīʿah contracts across 26 jurisdictions, producing a quarterly panel dataset covering 384 observations from 2014Q1 to 2024Q3. Results: Mark-up financing averages 58.1 percent of the panel against 13.2 percent for PLS. Under Driscoll-Kraay inference PLS displays an inverted-U relationship with stability, but no coefficient survives the wild bootstrap, and the placebo exercise shows the conventional test rejecting a true null in up to 47.0 percent of draws at 5 percent nominal size. Conclusions: The evidence remains inconclusive on risk sharing; apparent cross-country findings may reflect the inference procedure rather than the relationship itself. Limitations: The stability index substitutes the capital ratio for equity-to-assets, and the panel is unbalanced. Contributions: The study assembles the first cross-jurisdiction contract-composition panel for Islamic banking, documents the fragility of conventional inference here, and recommends reclassifying the underlying indicators as core.]]>
