Musharakah

A joint enterprise or partnership structure with profit/loss sharing implications that is used in Islamic finance instead of interest-bearing loans. Musharakah allows each party involved in a business to share in the profits and risks. Instead of charging interest as a creditor, the financier will achieve a return in the form of a portion of the actual profits earned, according to a predetermined ratio. However, unlike a traditional creditor, the financier will also share in any losses.

Musharakah plays a vital role in financing business operations based on Islamic principles, which prohibit making a profit on interest from loans. For example, suppose that an individual (A) wants to begin a business but has limited funds. Individual (B) has excess funds and wishes to be the financier in musharakah with A. The two people would come to an agreement to the terms and begin a business in which both share a portion of the profits and losses. This negates the need for A to receive a loan from B.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Musharakah — Equity financing. This is very similar to the Mudarabah contract, except that the customer puts up part of the equity. The Islamic financial institution and the customer provide financing for a specified project in agreed proportions. All parties …   Financial and business terms

  • Musharakah —   Islamic term for medium and long term equity lending bank facilities. See also Mudarabah and Islamic banking …   International financial encyclopaedia

  • Islamic banking — Banking A series on Financial services …   Wikipedia

  • Muscharaka — ist ein Begriff aus dem islamischen Bankwesen und bedeutet eine Art von Beteiligungsfinanzierung, bei der die Partner sowohl den Gewinn als auch den Verlust teilen. Inhaltsverzeichnis 1 Muscharaka als Beteiligungskonzept 1.1 Gewinnausschüttung… …   Deutsch Wikipedia

  • Abd al-Rahman Munif — ʿAbd al Raḥmān Munīf (árabe: عبد الرحمن منيف) (Ammán, Jordania; 29 de mayo de 1933 Damasco, Siria; 24 de enero de 2004) fue un político y novelista árabe, caracterizado entre los más sobresalientes por haber usado técnicas narrativas modernas.… …   Wikipedia Español

  • Meezan Bank — Limited Type Public Limited KSE: MEBL LSE: Industry Islamic Banking …   Wikipedia

  • Murabaha — Part of a series on Islamic jurisprudence (Fiqh) …   Wikipedia

  • Islamic banking —   Bank financing based on the sharing of risk and profit rather than on the western concept of the payment of interest for the lending of money. See also Mudarabah and Musharakah …   International financial encyclopaedia

  • Mudarabah —   Islamic term for short term commercial bank credit. See also Musharakah and Islamic banking …   International financial encyclopaedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.