Partnership (Musharaka) In Islamic Economics
Keywords:
musharaka, diminishing musharaka, shirkat al-milkAbstract
The term musharaka is derived from the Arabic word shaaraka, which means "to share" or "to enter into partnership." In practice, musharaka (shirkat al-inan) refers to an arrangement between two or more parties based on the sharing of profit and loss. Under this contract, each participating party contributes a certain amount of capital, and this contribution gives that participant the right to dispose of or manage the partnership capital. The profit earned from the partnership's activities is distributed among the partners according to a ratio agreed in advance in the contract, while any loss incurred is distributed in proportion to each partner's share in the musharaka capital. The ratio for profit distribution may differ from the ratio for loss distribution
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