Wakala

Wakala is the agency contract which is used widely in Islamic Finance. The applications ranging from brokerages services in permissible activies, like certain stocks, as well as to be the agent in a Murabaha transaction. The client, who wants to be financed, acts as agent of the bank to acquire the asset, then sold to him on credit installments. Agents can be compensated for their assignment with a fixed, variable or performance model, which is frequently used to influence pay outs and cash flows in financial engineering.