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In plain terms
Mudarabah
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Mudarabah is a partnership in which one party provides capital and another provides labor or expertise. Profits are shared by an agreed ratio, and losses fall on the capital provider alone, barring negligence. It is a recognized alternative to interest-based finance.
Related terms
Musharakah
Musharakah is a partnership in which two or more parties contribute capital and share both profit and loss by agreed terms. It differs from mudarabah, where only one party…
Riba
Riba is the term used in the Qur'an and hadith for an unjustified increase in a loan or in certain exchanges. It is commonly translated as interest or usury. Fatwas on banking…