Islamic finance refers to financial activities that comply with the principles of Sharia, or Islamic law. It prohibits practices such as charging interest, known as riba, and encourages risk-sharing and ethical investments. Instead of earning interest, financial institutions earn profit through equity participation and trade. In Islamic finance, contracts must be transparent and fair, ensuring that all parties understand the terms. Common financial products include Murabaha (cost-plus financing) and Mudarabah (profit-sharing). This system aims to promote social justice and economic development while adhering to Islamic ethical standards.