| Financial/Capital Lease | Ijara | The financier bought the asset in which the client needs and then rent them to the client. The client paid installment + rent to the financier |
| Murabaha | The financier buys the asset from the provider and then sells it to the client. The client pays fixed installment to reduce the debt |
| Bonds Financing | Ijara | In this arrangement, the client essentially doing sale and lease back arrangement with the financier |
| Murabaha | The financier provides financing and the client (known as the mudarib) invests the capital according to some pre agreed business plan. The profit of the business is distributed according to a predetermined ratio, but any financial loss is incurred only by the financing providers (worked just like in the Private Equity industry where General Partner provide the Management and Limited Partner who provide them with the capital). |
| Musharaka | Essentially a musharaka is a joint-venture. As with the mudaraba, the profit of the business is distributed according to a pre-determined ratio, however, in a musharaka the loss is distributed in proportion to each partner’s share of the capital. |
| Financing needs | Musharaka | The financier acts as the buyers for the projects. When the project reached a certain completion, the financier pays the money according to the pre-arranged agreement |
| Salam | The financier pays for goods that are supposed to be delivered in the future. The main difference between Salam and Musharaka is that in Musharaka is more like a long term financing while salam is more of like short-term financing. |
