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.