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muḍārabah


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Legal contractual arrangement under Islamic law between two partners for profit sharing—one provides capital and the other provides entrepreneurial or management skills. Islamic banks allow depositors to provide capital for borrowers to invest. Depositors may earn a share of either the bank's profit or the profit of a specified investment. If the investment or bank incurs a loss, no profit is paid to the depositors.

Subjects: Economics — Islam.


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