An Investigation of the Techniques of Financing

Abstract

In recent decades, Islamic finance has been faced with a considerable growth trend. One of its main characteristics is that financier cannot charge any interest and will consider a mark-up or share in the profits instead of that. Several kinds of standard products have been developed in financing areas toward trade and projects. Some of these products have been developed directly according to the Quran principles and some others are the result of financial engineering which have been created from the combination of diversified and accepted financial instruments for achieving the product which leads to the acceptable return against acceptable risk. Major part of the said growth of Islamic finance especially in 1970s was for the reason of the needs for oil export of Islamic countries. Now, although industries have been faced with several diversifications, the importance of project finance has not been decreased. At the same time, Islamic financiers have been dependent to the credit constraints of the banks. Current study will assess the project finance, will compare it with the traditional financing and finally will determine some of the techniques which is being used in Islamic countries.