Mudharabah is a Shariah financing principle based on cooperation between an investor (rab-al-mal) and an entrepreneur (mudharib). In mudharabah, mudarib is responsible for managing the business and acts as an entrepreneur who manages the operations and makes operational decisions. Meanwhile, rab-al-mal acts as the capital provider and plays the role of an investor
What is Mudharabah's Benefit?
Benefits of the mudharabah method include the sharing of profits and risks between the parties involved. This contract can encourage entrepreneurship, as it allows individuals with expertise to partner with capital providers to start a business. Additionally, the mudharabah contract aligns with Islamic principles and values, promoting ethical and socially responsible investment.Profit is shared based on a pre-agreed percentage, while losses are borne by the investor.