Rate of Mudarabah

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Definition of "Rate of Mudarabah"

Ratio of profit-sharing between the owner of the capital and the entrepreneur, who uses these funds on the basis of mudarabah. It is an alternative for or parallel to the rate of interest in the capitalist economy where funds are advanced by one party to the other as a loan. Manipulation in the rate of mudarabah can be made to adjust the supply of and demand for investible funds in the Islamic economy.

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