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Islamic Banking: Why Not Mushārakah Financing?

Abstract

Risk-sharing is deemed as the hallmark of Islamic banking. But partnership-based financing did not gain general acceptance among Islamic banks. This paper takes note of the adaptation of mushārakah as mode for financing. It then explains an alternative adaptation that might allay some of the apprehensions about mushārakah financing. It also draws attention to the type of effort that Islamic banks will need in order to popularize mushārakah-based financing.

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