The fast growing, Sharia-compliant Islamic finance industry has the potential to promote financial stability because of its risk-sharing and asset-backed features, International Monetary Fund Managing Director Christine Lagarde has said. Speaking at conference in Kuwait Wednesday, she said that Islamic finance has, in principle, the potential to promote financial stability because its risk-sharing feature reduces leverage and its financing is asset-backed. Ms Lagarde said, Islamic banks also offer profit sharing and loss-bearing accounts that can help mitigate losses and contagion in the event of banking sector distress.