Mastering Islamic Finance

5

Key transaction types in Islamic finance

Introduction

Equity-type: transactions

Mudarabah (Partnership – one party contributes capital)

Musharakah (Partnership – all parties contribute capital)

Asset finance:Murabaha (Sale of an asset at a known profit mark-up)Ijarah (Leasing of an asset)Istisn’a (Sale of an item to be constructed or manufactured)Salam (Sale of fungible item yet to be produced)

Other key transaction types:Wakala (Agent providing services to a Principal)Hawalah (Transferring a debt)Rahn (Providing security)Kafalah (Providing a guarantee)

Conclusion

INTRODUCTION

Part 1 of the book aimed to set the foundation in terms of the principles, beliefs and conceptual framework underpinning the practice of Islamic finance.

We now ...