HDalhaaawi

INTRODUCTION Murabaha is one of the most popular financing modes used by Islamic banks and financial institutions. It is type of sale ( ba'i ) in which the seller reveals to the buyer the cost of the underlying commodity and amount of profit in the form of a mark-up. In this sense, Murabaha is not an interest-bearing loan (conventional loan or in Arabic ( qardh ribaw i ), but rather it is a sale of a commodity for a price equal to its original cost plus a given mark-up.  A Murabaha transaction is usually executed by the bank purchasing the commodity desired by the client and selling it to him on a cost-plus-profit basis. Under this arrangement, the bank is bound to disclose cost and profit margin to the client. Therefore, the bank, rather than lending money to a borrower, purchases the commodity from a third party and sells it to the customer for a higher price. This financing mechanism has nothing to do with the conventional way of financing. The key dif...

DEFINITION, TYPES AND HISTORY OF ISLAMIC BOND (SUKUK) Definition Sukuk is the Arabic name for financial certificates , but commonly refers to the Islamic equivalent of bonds . Since fixed income, interest bearing bonds are not permissible in Islam , Sukuk securities are structured to comply with the Islamic law and its investment principles, which prohibits the charging, or paying of interest. Financial assets that comply with the Islamic law can be classified in accordance with their tradability and non-tradability in the secondary markets. History: In classical period Islam , Sakk (sukuk) – which is cognate with the European root " cheque " from Persian pronounced check' - meant any document representing a contract or conveyance of rights, obligations or monies done in conformity with the Shariah . Empirical evidence shows that sukuk were a product extensively used during medieval Islam for the transferring of financial obligations originating fr...