Glossary
Musharaka
مشاركةDefinition
An equity partnership where both parties contribute capital and share profits and losses by agreed ratios.
Musharaka is the most genuinely risk-sharing of all Islamic finance contracts. Both partners participate in profits and losses, both can participate in management.
Diminishing musharaka (musharaka mutanaqisa) is the basis for most halal home-buying schemes outside conventional mortgage frameworks.