How is credit created in Islamic banking?

Question

and how does this differ from the fractional/fictional reserve system of western banking

Please don't answer if you dont understand the question

thank you Ruchjat K for your answer

It contains words that I don't know, and have been unable to look up

Answer 1

The syariah transaction should meet this qualification :
1)transwaction should be agreed by the related parties
2)free transaction can be done as long as its object is hala and in good condition
3)money is only use as a tool of exchange and notna commodity
4)its ttransaction should be without riba
5)its transaction is without cruelty
6)its transaction is without maysir and gharar and haram
7)does not reckognize time value of money.
8)transaction should be based on an agreement and one agreement should contais only one transaction
9)no price distortion and no bribe and other mean of corruption
The credit is created in islamic banking through:
1)Murabahah or sales and purvhase in which bank purchase such as motor car from a dealer and then sold it to bank's customer with an agreed profit margin..The customer paid it in monthly installment that has been agreed by the bank and its customer.It is the same with consumer credit in the conven
tional bank.
2)Salam is a sale and purchase agreement between bank and its customer for a goods that should be an order for making it in a certain period.The goods will be transfered if the making process has been finished..The customer as a purchaser wil pay in line with the agreed agreement for a certain period of time.
3Istishna is a sale and purchase agreement for ordering a certain goods with a certain criteria or spesification which is agreed between bank and customer .The customer will pay it in instalment scheme.such as building in construction.
4)Mudharabah is an agreement for a business cooperation between bank as fund arrangement and its customer as fund management.The profit of this business will be divided bet ween bank and customer in a ration as has been agreed
.If there is loss,it should be born by the fund management only

5)Musyarakah is an agreement between bank and customer for a certain business where each party gives each fund contribution and its profit or loss will be divided in line with the agreement. between the two parties.