An introduction to Islamic finance

There is a distinction in shari`a between charitable financial activity and commercial financing. Several Islamic financial instruments are discussed in detail, including musharaka , mudaraba , murabaha , and ijara . Musharaka is conceptually defined, then a practical guide to its use is provided, followed by problems and objections to musharaka financing. The usage of murabaha is outlined in detail, and is highlighted with examples. The application of ijara is outlined and compared with the other instruments presented. Other topics covered include salam , istisna , and Islamic investment funds, and the principle of limited liability.