Murabaha

Murabaha is an Islamic financial contract that allows the purchase of an asset with deferred payment. The seller (murabahi) agrees to sell an asset to the buyer (mureebah) at a cost plus a profit margin. The profit margin is known as the mark-up. The buyer then pays the seller the cost of the asset plus the profit margin in installments over a period of time.

Murabaha is a popular form of Islamic finance because it is based on the principles of risk-sharing and profit-sharing. The seller bears the risk of the asset until it is sold to the buyer. The buyer bears the risk of defaulting on the payments.

There are two types of murabaha:

* **Spot murabaha:** The buyer pays the seller the full price of the asset upfront.
* **Deferred murabaha:** The buyer pays the seller the cost of the asset plus the profit margin in installments over a period of time.

Murabaha is used for a variety of purposes, including:

* Financing the purchase of real estate
* Financing the purchase of automobiles
* Financing the purchase of equipment
* Financing the working capital of businesses

Murabaha is a Shari'ah-compliant form of finance because it is based on the principles of risk-sharing and profit-sharing. The seller bears the risk of the asset until it is sold to the buyer. The buyer bears the risk of defaulting on the payments.