Abstract

Musharakah financing is Shari‘ah based equity financing, which is rarely utilized in the banking practices due to multiple risk exposures in partnership based ventures. This case article pertains to musharakah project financing by a bank in Pakistan to highlight different types of risks associated with implementation of musharakah based financing in the industry. The approach adopted in this research study is narrative based where different steps for the implementation of musharakah financing including associated risks and issues are highlighted in terms of compliance with Shari‘ah, particularly in the context of using musharakah in the construction of residential flats.

Keywords

Musharakah, Projects Financing, Risks in Musharakah Financing, Islamic Banks