Islamic Financing concepts:
Islamic finance is generally asset backed.  Hence financing of trading is permitted.  According to Shariah a valid trade is conducted if the seller and buyer exchange an offer and acceptance which specify the object of sale and the price and they both agree.
Therefore any financing conducted through valid trading by mutual consent is permissible.  Here is a brief description of the most commonly used Islamic trading contracts.

Murabaha
Murabaha is a trading activity in principal. The bank will purchase the commodity required by the customer from the market and sell it to the customer at a mutually agreed profit margin. The customer will pay this price in installments.  Terms are fixed during the tenor of this agreement. 

Musharaka:
A joint venture where both parties inject capital to conduct a business, where partners share profits according to a predetermined ratio whereas loss is shared as per the ratio of investment. 

Mudaraba:
This partnership is based on a Profit and Loss sharing agreement where one partner (Rabb-ul-Maal) invests his funds and the other partner (Mudarib) who has know how, manages the business.  The profit earned is shared between the parties on a predetermined ratio, after deducting the costs that the Mudarib has incurred to run the business. 
In case of a loss the Rabb-ul-Maal bears the loss and the Mudarib does not earn anything. 

Ijarah:
An Ijarah Agreement can be considered a “rent-to-own” transaction, where the benefits of the asset are transferred to the customer.  Under this agreement the bank allows usage of the asset under installment plans to the customer.  The installments consist of rentals for use and part payment.  At the end of the agreement period the customer can either purchase or return the asset to the bank.

Salam :
Under this contract the seller undertakes to supply specific goods to the buyer at a future date in exchange of an advanced price fully paid at spot.  The price is paid immediately in cash but supply of the purchase goods is deferred to a fixed date.

Istisna :
When a commodity is transacted before it comes into existence, the transaction is known as Istisna.  It is an order to manufacture a specific commodity for a purchaser.  The manufacturer uses his own material to manufacture the goods.  The price and product specifications are settled by mutual consent of all parties.

Structure of Islamic Banking Products: