Glossary
Musharakah
A partnership where everyone contributes money and shares the profits and the losses.
مشاركةmushārakah
Musharakah is joint enterprise: all partners contribute capital, share profit by agreement and share loss in proportion to their capital. AAOIFI covers it in Shariah Standard No. 12. It is the structure Islamic finance is often said to have been founded to promote, which is why it appears in the critique of cards: AAOIFI's tawarruq standard states that institutions 'have to show strict commitment towards using modes of investment and financing such as the various forms of Musharakah' and should restrict tawarruq to clients whose needs cannot be met by those modes.
Related terms
MudarabahA partnership where one side puts up the money and the other does the work, and they share the profit.TawarruqBuying something on credit and selling it on for cash, so you end up with money now and a bigger bill later without paying interest.SukukIslamic investment certificates that give the holder a share in real assets rather than a claim to interest.
Sources
- AAOIFI Shariah Standard No. (12); Shariah Standard No. (30) Appendix B