Islamic finance - Investment & Finance Definition
A set of strict rules that forbid making or receiving interest payments. To get around this prohibition, trade financing is obtained by buying inventory that will be resold at a pre-determined price on a future date, which is called Murabaha. Financing for capital projects is called Musharaka, which is funding by two or more parties who may be active managers in a partnership. Losses are shared on the basis of the capital contribution. Profits may be shared in any way the partners decide. See also Istisna, Qardhul Hasan, and Riba.Webster's New World Finance and Investment Dictionary Copyright © 2010 by Wiley Publishing, Inc., Indianapolis, Indiana.
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