Question

Explain how Mudaraba application would enhance economic prosperity for everybody and why its application by Islamic banks is minimal

Answer 1

We all know Islamic financing system is much unique then what economist are saying from years. Sukuk (Discounted Bond), Murabaha loan, Mudaraba financing are types of it's finance.

So your question about Mudaraba, which means kinf of Partnership we can give a name as Partner in only profit, and silent partner. But it's not same as that here in a contract One general partner will provide capital, and Mudaraba Partner will provide mainly of Labour and sometime marketing too (Experties or contacts we can say).

So even in mordern world capital and labour are major factor of production, by taking concept of Mudaraba Financing we can come to Optimal Level of contract where we can maximise business in terms of micro economy which can show effect on macro economic GDP Level, advantage will be Capital owners will risk only capital and not responsiblity of Labour, and labour providers will only risk their trust in labours and not the profit.