Murabaha

(redirected from Murabahahs)

Murabaha

A structure in Islamic finance in which one party buys a good for cash and then sells it to a second party for deferred payments. For example, if Joe wishes to buy a house, he asks a bank to purchase it and then sell it to him for a higher price than the bank paid. While the bank pays cash up front, Joe amortizes his payments over an agreed-upon number of years. From Joe's perspective, this is similar to a conventional mortgage because the payments are likely the same. Because there is no debt with interest, a murabaha is thought to conform to Islamic law. However, murabahas are controversial even within Islamic finance because some scholars believe the profit on the second sale imitates interest too closely.
References in periodicals archive ?
One example would be Murabahah, which is currently Malaysia's most common Sukuk structure, largely owing to the establishment of Bursa Suq al-Sila in August 2009 - a commodity trading platform to facilitate Islamic liquidity management and financing by Islamic banks.