Mudarabah
مضاربة
Pronunciation: moo-DAH-rah-bah
A profit-sharing partnership where one party provides capital and the other provides expertise.
Definition
A profit-sharing partnership where one party (Rab al-Maal) provides capital and the other (Mudarib) provides expertise and management. Profits are shared according to a pre-agreed ratio — for example, 60/40 or 70/30. Financial losses are borne entirely by the capital provider unless caused by the manager's negligence or breach of contract terms.
The mudarib's loss is limited to their time and effort. Mudarabah is used in Islamic banking for investment accounts, mutual funds, and some business financing arrangements. It is one of the two foundational partnership structures in Islamic finance (alongside Musharakah).
Related Terms
Musharakahمشاركة
A joint partnership where all parties contribute capital and share profits and losses proportionally.
Rab al-Maalرب المال
The capital provider in a Mudarabah partnership — provides funds but not management.
Mudaribمضارب
The managing partner in a Mudarabah — provides expertise and labor rather than capital.
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Mudarabah (مضاربة) — A profit-sharing partnership where one party provides capital and the other provides expertise. A profit-sharing partnership where one party (Rab al-Maal) provides capital and the other (Mudarib) provides expertise and management. Profits are shared according to a pre-agreed ratio — for example, 60/40 or 70/30.
- A profit-sharing partnership where one party provides capital and the other provides expertise.
- Category: Financing Structures
- Related: Musharakah, Rab al-Maal, Mudarib
- Compare related Shariah-compliant products on HalalWallet
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Last reviewed: 2026-07-01
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