Halal finance refers to financial practices that comply with Islamic law, or Sharia. It prohibits activities involving excessive uncertainty, gambling, and investments in businesses related to alcohol, pork, or other non-permissible items. Instead, halal finance promotes ethical investing and profit-sharing arrangements, ensuring that financial transactions are fair and transparent.
In halal finance, common instruments include Murabaha (cost-plus financing), Mudarabah (profit-sharing), and Ijara (leasing). These methods aim to create a balance between risk and reward while adhering to Islamic principles. Halal finance is increasingly popular among Muslims and non-Muslims seeking ethical investment options.