Editing Islamic banking and finance (section)

====Mudarabah====
A ''mudarabah'' or ''mudharabah'' contract is a profit sharing partnership in a commercial enterprise. One partner, ''rabb-ul-mal'', is a [[Partnership#Silent partners|silent]] or sleeping partner who provides money. The other partner, ''mudarib'', provides expertise and management.{{sfn|Khan|2015|p=91}} The arrangement is similar to [[venture capital]] in conventional finance, in which a venture capitalist finances an entrepreneur, who provides management and labor.<ref name="wilson-2012-184">{{cite book|last1=Wilson|first1=Rodney|title=Legal, Regulatory and Governance Issues in Islamic Finance|date=2012|publisher=Edinburgh University Press|page=184 |url=https://books.google.com/books?id=JZlvAAAAQBAJ&q=mudaraba+very+similar+to+venture+capital&pg=PA184|access-date=16 September 2017|isbn=9780748655274}}</ref>

Profits are shared between the parties according to a pre-agreed ratio, usually either 50%–50%, or 60% for the ''mudarib'' and 40% for ''rabb-ul-mal''. If there is a loss, the ''rabb-ul-mal'' loses the invested capital, and the ''mudarib'' loses the invested time and effort. The sharing of risk reflects the view of Islamic banking proponents that under Islam, the user of capital – [[labor (economics)|labor]] and management – should not bear all the risk of failure. Sharing of risk, according to proponents, results in a balanced distribution of income, and prevents financiers from dominating the economy.<ref name="CIEF">{{cite web|website=Concepts in Islamic Economics and Finance |date=2 April 2006 |url=https://cief.wordpress.com/2006/04/02/mudarabah/|title=Mudarabah|access-date=17 August 2015}}</ref><ref>[http://www.central-mosque.com/fiqh/limliability.htm Musharakah & Mudarabah By Mufti Taqi Usmani] | Limited Liability| central-mosque.com</ref><ref name="IIFTU1998:17-36">[[Islam in Saudi Arabia#IIFTU1998|Usmani, ''Introduction to Islamic Finance'', 1998]]: p.17-36</ref>