Mudaraba and Mudharaba (also used in German)

In Islamic banking, a contract under which, as a rule, one party raises the capital for a venture and the other party does the work and also manages the business. – The distribution of profits is determined in advance by contract. In most contracts, any losses from the project are borne entirely by the party providing the capital, i.e. the bank. The general exception is when the other party to the contract has caused the loss through behavior in violation of the contract (an agreement between a financial institution and a company, with the financial institution acting as provider of funds and the company as the manager, for investing in a pre-determined activity or class of assets, which grants each party a share of the earnings which is determined at the time of the investment). – See Ijara, Istisna, Murabaha, Salam, Sukuk.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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