As an international law firm headquartered in France, one might say that Gide's expertise in Islamic finance is driven by pragmatic or opportunistic reasons, such as the fact that France has the largest Muslim population in Europe (about six million, three times that of the UK), or by a more general need for new sources of liquidity to jumpstart the economy.

These facts are undeniable, but Islamic finance has some key features of particular interest in the current climate, given the recent failings of conventional financing.

This is not to say that Islamic finance will substitute conventional finance. Today, Islamic finance represents only 1% of the global financial assets worldwide, and although the growth of Islamic finance has been 15% per year over the last three years, this is not going to significantly change the respective shares of Islamic/conventional financing.

We view Islamic finance as a useful complement to conventional finance, particularly in relation to specific investments such as assets, infrastructure projects or investments promoted by public entities or private companies.

The basis for all Islamic finance lies in the Shariah principles, or Islamic law. Central to this is the idea that money itself has no intrinsic value. Therefore, to make money from money is forbidden – wealth can only be generated through legitimate trade and investment in assets.

There is therefore no financing of the financial economy, like that which has recently led to artificial bubbles and excessive leverages, limiting the risk of disconnection between the monetary counterparty and the real economy. In our view, this ensures an environment more benign and associated with significantly less risk.

Islamic finance investments are guided by scholars whose role is to make sure that the funds will be used for the purpose of financing Shariah compliant investments. This is the second benefit – unlike many aspects of conventional financing, there is a high level of transparency, as the investment criteria are readily available.

Islamic finance products are also, as a result, less complicated, which should prevent situations seen recently in which investors were unable to assess the nature of the risk they were taking.

There is also an added level of responsibility on the part of the financier, who is linked to both the profit and loss of any venture, as opposed to simply waiting for a lapse of time to collect their return. They are expected to make an active, sensible judgement call on the risk-return profile.

Although an element of risk is required to deliver a return, it is shared by both parties. Therefore, the entrepreneur who seeks to borrow funds through Islamic finance is only due to pay to the financier the remuneration resulting from the cash flows generated by the financed assets or projects and its value at maturity. In the case of lower performance of the underlying assets, the entrepreneur's obligation to pay the financier is reduced proportionately.

Finally, because of all these factors, these investments are by consequence long-term and unlikely to be driven by the short time fluctuations and speculation seen in conventional finance.

Turning to Europe and legislative change, France has been at the forefront of adjusting its legal and tax environment in order to develop Islamic finance. Earlier this month, the Minister of Finance, Christine Lagarde, announced two new reforms: a new tax instruction regarding the tax treatment of Ijara (lease to own) and Istisnaa (forward contract) transactions and a new dedicated legal vehicle for the issuance of sukuk (Islamic bond equivalent) under French law.

While it is early days for Islamic financing in Europe, we believe real change is afoot; in part down to the lessons learned from the global credit crunch, but largely because investors are realising the very real benefits of approaching financing under Shariah principles.

Giles Saint Marc is a partner at Gide Loyrette Nouel and chairman of the Islamic Finance Committee of Paris Europlace.