You can refer to papers like

Profit and loss sharing  contracts of islamic banks

Profit and loss  sharing  paradigm  in Islamic bank : constraint or solution  for liquidity management 

I have written a paper earlier on this issues but there is little effort to move toward profit and loss sharing refer to the paper:

THE EMERGENCE OF ISLAMIC BANKING: Development, Trends, and Challenge

IOSR Journal of Business and Management (IOSR-JBM) 7 (2), 2278-487X, 2013

The short answer is yes, Islamic banks can fully implement profit and loss sharing (PLS). In the liability side, Islamic bank happily take PLS deposits. Meanwhile, in the asset side, current practice shows than IB prefers non-PLS mode of financing. However, from my study (see Ascarya, et al., 2014: IMPACT OF INVESTMENT MODEL TO PROFITABILITY BEFORE AND DURING FINANCIAL CRISIS), IB will be more optimal to have more PLS financing.

The short answer: Yes, they can!

But, unfortunately,  they do use PLS in the minimum levels (in general: less than 5% percent of total finance), because PLS pairs unaccepted risk rate for Islamic bankers, in comparison with Ijarah or Murabaha.

 A bank can be Islamic if it follows the Sharia (Islamic rules). I believe Islamic banks today still have not reached to the point of FULLY implementing profit and loss sharing according to Sharia. They can probably achieve that in the future after eliminating all non-Islamic transactions, such as opening deposit accounts at non-Islamic banks.

I have written a research paper "An overview of Islamic banking: Indian perspective". During this study I found that the scope of Islamic Banking is increasing with time but adherence to Islamic Banking laws in to to is a matter of debate and to the large extent it is tough-task especially looking at the global scenario.  

I have answered this question in several of my papers. Please see: http://www.icrjournal.org/icr/index.php/icr/search/authors/view?firstName=Abdul%20Karim&middleName=&lastName=Abdullah&affiliation=&country=

I'm afraid to say no! I think that Islamic finance is an Utopia which will remain an Utopia until we can find practical solutions to remove some serious obstacles such as information asymmetry and its sinned children, moral hazard and adverse selection fully and neatly. Till then we are just attempting to modify Islamic finance and make it looser in order to make its share a little bit bigger.

No. It's the setting that plays an important role in shaping the way Islamic banks operate. We can't ignore the reality that Islamic banks face adverse selection and moral hazard problems, to which debt-based contracts are solutions. PLS contracts are thus less practical as far as the business environment is concerned. Applying debt is not un-Islamic. Debt contracts are mentioned in the Quran, but over time the way we practice evolves, again, in response to the business environment. It is the art of fiqh, content and context. Nothing un-Islamic about it. I would suggest you read Shariah Minds 

Arguably, implementing pls in islamic bank, especially when islamic bank provides loan to micro and small enterprises, is a little bit ambitious project. 

First, the micro and small are having difficulties in preparing the reliable financial statement as a basis of pls. Second, imagine if an islamic rural/small bank has 1000 customer (mudharib) who apply pls, therefore islamic bank needs to provide so many officers since the heart of pls is assistance, monitoring, and collaboration. Third, risk adverse behavior of islamic bank vs entrepreneur-risk taking behavior of shahibul maal in pls.

potential solution: Islamic bank needs to design the manual financial statement template/form so that in the future software based financial statement could be developed. training to the micro and small enterprise is a must. Islamic banking needs to include the monitoring, assistance activities as one of the key performance indicators of their officers. 

I believe that we need to allow Islamic banks to use the notion of deferred revenues/profit to reflect the nature of its finance methods and processes. Mudaraba and murabaha are looked by many as a fair means by which Islamic banks and their clients share profit and loss from business transactions. However, the traditional accounting treatment of non-Islamic banks are not fully adhered to by Islamic banks, thus a move toward deferred revenues and profit should be fully implemented in recording various Islamic banking transactions.

This is very provoking, controversial and difficult question. You need to really understand the theory and practice. What is the shariah perspective and the challenges faced by the industry to fully implement Islamic finance. What I can say is that Islamic finance exist in the conventional finance infrastructure, where, Islamic finance share of the market is only 1% as compared to their counterpart conventional finance, 99%. For trade finance, the UCP600 and other regulations did not consider the Islamic finance practice. Thus, it is a challenge to implement Islamic trade finance...

I don't think that we should blame any one. Everyone must give his or her best. Currently, the realm of banking and finance is still in process of transition. I prefer to call it as "awakening period". After 400 hundreds years, scholars managed to introduce Islamic banking and finance. If we can imagine, Islamic banking and finance is just a small wheel that moves along the bigger wheel of conventional banking and finance. As a smaller wheel, Islamic banking and finance cannot entirely escapes from following certain conventional banking rules. However, it is rather positive in nature. By adopting best practice method, some conventional banking rules are now influenced to follow the Muamalat principles. This is strongly motivated especially from the collapse of world's economy such as happened in 2008. Significantly, riba is and must be eliminated.   

I believe that clients should be primarily the real muslims. In that situation, regulators and banks better able to plan and implement Islamic banking.

I believe that all parties should be primarily understand and real implemented or perform the real teaching of Islam. Believe on that system also must be follow and implemented to achieve the goal and objectives.

Of course they can, but they would have to enter the real sector and transform themselves into investment houses rather than lending institutions. We are all to blame.