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Murabaha: Mark-Up Financing
What is a Murabaha?
Murabaha agreements have a seller, usually a bank, buy an asset from a third party and sell it at cost plus some agreed upon profit to a buyer, usually an individual or a company, payable over an agreed upon period of time. Whereas in an interest-based transaction the bank advances money and charges the borrower interest, in a Murabaha transaction the bank purchases the asset itself, assumes the risk, and charges the buyer the cost of the good and an agreed upon profit.

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