Which of the following concepts is forbidden in Islamic finance?

Usury, or Riba, is forbidden in Islamic finance due to the religious belief that it is exploitative and unjust. Riba refers specifically to the practice of charging excessive interest on loans, which can lead to unfair and inequitable financial arrangements. Islamic finance is grounded in the principles of fairness and risk-sharing; therefore, financing methods that involve guaranteed profits without corresponding risk are not permissible.

In contrast, profit-sharing investments and equity financing are encouraged because they align with the Islamic principles of sharing risk and reward. These methods require the parties involved to engage in fair and equitable transactions. Short-term loans are not inherently forbidden but need to be structured in a way that does not involve Riba. The core tenet of Islamic finance is promoting ethical investing and equitable financial practices that avoid exploitation.