The Muḍāraba Facility: Evolution, Stasis and Contemporary Revival

Ebrahim, M.S.; Sheikh, M.

Abstract

The age-old concept of partnership was seen by Muslim jurists from the 8th century Hijra onwards as a sacrosanct commercial arrangement—and, therefore, subjected to a form of fixity which is unparalleled in any other religious tradition. Since the formative period of Islamic law, the limited-liability partnership, or muḍāraba, a specific variation of the over-arching mushāraka partnership, has continued to hold central importance for Muslims. Yet, despite this centrality, it has not been examined with a view to reformulating it for contemporary Islamic banking and finance. This has led to its virtual neglect in modern Islamic banking operations. This article suggests that the revival of the muḍāraba facility requires the overcoming of key disadvantages inherent in its structure and that a restructuring on the basis of the hybrid facility called participating preferred ijāra is one possible way of achieving such an outcome.

Citation

Ebrahim, M., & Sheikh, M. (2015). The Muḍāraba Facility: Evolution, Stasis and Contemporary Revival. Arab Law Quarterly, 29(3), 246-260. https://doi.org/10.1163/15730255-12341305

• Journal Article Type: Article
• Acceptance Date: Apr 30, 2015
• Publication Date: Sep 1, 2015
• Deposit Date: Apr 3, 2015
• Publicly Available Date: Apr 8, 2015
• Journal: Arab Law Quarterly
• Print ISSN: 0268-0556
• Electronic ISSN: 1573-0255
• Publisher: Brill Academic Publishers
• Peer Reviewed: Not Peer Reviewed
• Volume: 29
• Issue: 3
• Pages: 246-260
• DOI: https://doi.org/10.1163/15730255-12341305
• Keywords: Participating preferred ijāra, Rabb al-māl, Mushāraka, Muḍāraba, Sunna.
• Public URL: https://durham-repository.worktribe.com/output/1434624