Evaluation of Musharakah Financing, Standards, Country Cases, Major Obstacles and Solutions —A Study of Islamic Finance Partnership Methods
- 1 Central Bank of the Republic of Türkiye, İstanbul, Türkiye
Abstract
Islamic finance products and services directly reflect the real economy. The main reason they are not based on the appreciation of money, however, could be sales (murabahah, salam, istisna), leasing (Ijarah), investment (wakala), partnership methods (musharakah, mudarabah), or other asset-backed instruments (sukuk). Even though sales via leasing-based financing are widely used, partnership methods (musharakah, mudarabah), which are necessary for the real economy and growth, account for only a small share of total financing. This study aims to analyze musharakah (capital partnership) financing with all aspects, regulations, standards, country cases, and why this method is not used as expected. The answers show that there are no specific differences between countries in rules and practices; however, the reasons behind comparatively lower musharakah financing are the same. To channel resources directly into production and investment, possible risks need to be reduced, control mechanisms strengthened, and the human resources empowered.
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