Mudarabah
/ˌmuːdəˈrɑːbɑː/
Definitions
- (n.) An Islamic finance contract where one party provides capital to another who manages a business venture, sharing profits according to a pre-agreed ratio, with losses borne by the capital provider.
The entrepreneur secured funding through a mudarabah agreement to start her halal food business.
Commentary
Mudarabah is fundamental in Islamic banking, emphasizing risk-sharing and prohibition of interest; clarity in profit-sharing ratios is essential in drafting.