An Introduction to Islamic Finance: Theory and Practice

70 APPENDIX A Usury, Riba and Interest: A Historical Perspective A historical review of the term “usury” brings to light and exp ...

Riba vs. Rate of Return 71 referred to in a deprecating manner, claiming that “hypocritical ascetics are accused of practicing i ...

72 AN INTRODUCTION TO ISLAMIC FINANCE when money began to play a critical role in large - scale commercial transac- tions and wa ...

Riba vs. Rate of Return 73 ISLAM AND INTEREST The practice of riba was prevalent at the dawn of Islam and when the prohi- bition ...

74 AN INTRODUCTION TO ISLAMIC FINANCE criticized the institution of interest and has advocated interest - and infl ation - free ...

75 CHAPTER 4 Financial Instruments T he economic activities in any economic system can be viewed as contracts between economic a ...

Contracts/Instruments Transactional Contracts Bay’(Sale) Trade Financing( Murabahah ) Fee-basedServices Partnership Ta kaful Qar ...

Financial Instruments 77 through various phases of economic activity, right from the purchase or sale of goods, to arrangements ...

78 AN INTRODUCTION TO ISLAMIC FINANCE of ownership, contracts for the utilization of assets transfer only the right to use a pro ...

Financial Instruments 79 auction sales, and so on. Contracts of exchange include a variety of con- tracts, which differ from one ...

80 AN INTRODUCTION TO ISLAMIC FINANCE specifi c product which the seller promises to deliver at a specifi ed future date. Howeve ...

Financial Instruments 81 the sense of both hire and lease. In general, it refers to the lease of tangible assets such as propert ...

82 AN INTRODUCTION TO ISLAMIC FINANCE Recently, Muslim jurists have also provided another contract, ijarah wa “qtina” or “hire - ...

Financial Instruments 83 is also suitable for use in the construction industry for building infrastruc- ture such as roads, dams ...

84 AN INTRODUCTION TO ISLAMIC FINANCE and resells them to the client at the quoted cost plus a profi t to be agreed upon mutuall ...

Financial Instruments 85 fi nanced through the murabahah is taken as security, but when no such asset is available, the fi nance ...

86 AN INTRODUCTION TO ISLAMIC FINANCE Bai’ bithamin ajil (BBA): In Malaysia and other Southeast Asian countries, a form of murab ...

Financial Instruments 87 management skills or goodwill, and so on. For the sake of our discussion, we will refer to a musharakah ...

88 AN INTRODUCTION TO ISLAMIC FINANCE period and also to prevent withdrawals by a depositor from investments funded by the depos ...

Financial Instruments 89 guarantees of fi nancial performance between economic agents. These con- tracts play a critical role in ...