- Published on
KembaraXtra – Islamic Finance – Islamic Capital Market – Profit-Participating Financing
Profit-participating financing is a quasi-equity arrangement where investors provide funds in return for a share of profits, without becoming full owners of the business. The investor’s return is directly linked to the performance of the underlying project, while management control remains with the entrepreneur or issuer.
This form of financing strongly reflects the Islamic finance principle of risk sharing and avoids interest-based income. It is commonly structured using muḍārabah or restricted mushārakah contracts and is widely applied in Islamic capital markets to support entrepreneurship and project financing.
0 Comments