Review, Reflect, Respond and Rebuild the Islamic Economy along with IBF Thought Leaders. Access to
all forums and discussions are exclusively for members of IBF Net. Create a forum or participate in an existing one on
cutting-edge topics in IBF.

Forum Forum IBF Net Classics Gharar in Mudaraba Reply To: Gharar in Mudaraba

  • Prof Mahmoud El-Gamal/ Moderator

    December 18, 2021 at 12:00 pm

    There can also be riba in mudaraba. Consider the case where the profit rate is all but certain (near zero variance), the wage for comparable work of the mudarib is well known in the market, but the profit share stipulated in the mudaraba contract is either much lower or much higher than the market wage. The discrepancy is riba. The idealization of mudaraba in mid century Islamic economics and late century Islamic finance was very unfortunate and based on deep misunderstanding of classical jurisprudence. Far from mudaraba being an ideal form of finance, jurists had to bend backward to find a way to permit it, because they felt that it is sometimes quite useful to have.