profit/loss sharing

An investment, similar to stock company, that is more like equity than debt. Where a 'silent partner' AKA investor AKA capital provider known as the 'rab-al-mal' invests his money and an entrepreneur known as the 'mudharib' invests their time and effort.

If the business is successful, then the profits are shared between the investor and the investor at predetermined percentages. (profit sharing)

If the business goes bankrupt, then the entrepreneur loses their time and the investor loses their money.  (loss sharing)

More Info:

Introduction to Mudarabah

Basic Rules of Mudarabah

Mudarabah in Islamic Financial Institutions

See also: