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--- 0_public:finance_and_economic_models:islamic_finance:islamic_finance [2025/01/27 20:06] – removed - external edit (Unknown date) 127.0.0.1
+++ 0_public:finance_and_economic_models:islamic_finance:islamic_finance [2025/01/27 20:06] (current) – ↷ Page moved from 0_public:islamic_finance:islamic_finance to 0_public:finance_and_economic_models:islamic_finance:islamic_finance pointnm
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+{{tag>finance}}
+====== Islamic Finance ======
+~~NOTOC~~
+The key difference between conventional and Islamic financing is that, while the time value of money is not permissible in a pure 'cash now for more cash later' transaction, it is <wrap hi>allowed if the financing is an integral part of a real trade in goods</wrap>.
+So while the organisation is <wrap hi>not allowed to lend USD 100,000 in cash now in return for USD 110,000 payable in a year</wrap>, it is <wrap hi>allowed to sell an asset with a market price of USD 100,000 for USD 110,000 payable in a year</wrap>.
+Therefore often described as an <wrap hi>asset-based financing system</wrap>.
+==== Trade Finance ====
+The <wrap hi>key Shariah Contracts used for trade financing are murabaha and salam</wrap>.
+==== Prohibited Practices ====
+  * Riba: Interest or usury((Wucher)), which is strictly prohibited in Islamic finance.
+  * Gharar: Uncertainty or ambiguity in contracts, such as speculative transactions or contracts with unclear terms.
+  * Maisir: Gambling or speculative transactions, where gains are based purely on chance.
+  * Haram Investments: Investments in businesses involved in activities prohibited by Islamic law, such as alcohol, gambling, pork, and unethical industries.