Sale-Based Contracts in Islamic Finance: Murabaha

There are two types of contracts in Islamic banking and finance, which are sale-based (exchange-based) contracts and investment based (equity-based) contracts. Sale-based contracts include murabaha, ijara, salam, and istisna; while investment-based contracts include mudaraba, musharaka, and investment wakala. Murabaha is a sale and purchase of an asset with immediate delivery and deferred payment and where the acquisition cost and the profit margin are disclosed to the purchaser.

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