Islamic Economics
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The Story of Abu Bakr Radhiyallahu Anhu’s Generosity in Giving Away All His Possessions
Abu Bakr (radhiyallahu anhu) was the most honoured and respected companion of the Prophet Muhammad ﷺ in the history of Islam. He was known not only for his strong faith, but also for his extraordinary generosity. One of the most inspiring stories from his life is when he gave away all his wealth in the cause of Allah ﷻ. This…
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How Do You Mitigate Investment Risk?
Investment is an important step in achieving long-term financial success. Risks in investment can come from various factors, such as market fluctuations, regulatory changes, or unexpected events, such as the global economic crisis. Although we cannot completely eliminate risk in investment, we can manage and minimise it with the right strategy. Here are some ways to effectively mitigate investment risk: …
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How Does Bad Cashflow Influence Profit Sharing in Mudharabah?
Mudharabah contracts represent a crucial aspect of Islamic finance, providing a partnership where one party supplies the capital and the other provides expertise and management. Howver, According to pre-determined ratios, the venture’s profits are divided, but the capital provider is responsible for losses. Understanding how a company’s cash flow influences profit sharing in Mudharabah contracts is essential for both parties…
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How to Analyse Profits Shared in a Mudharabah Contract from the Income Statement
The mudharabah contract is a highly regarded form of business cooperation in Islamic economics due to its fairness. In this contract, one party provides the capital (shahibul maal), and the other party provides the expertise or labor (mudharib). The goal of this contract is to achieve profits that will be shared according to the initial agreement. However, to ensure fairness…
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The Future of Crowdfunding with Artificial Intelligence (AI)
Crowdfunding has become one of the most popular ways to raise funds for various projects, ranging from small businesses to charity projects. Crowdfunding itself is the choice of many parties to raise funds for both social and commercial projects because of its simple and easy process. While in the development of technology, the world is entering a phase where the…
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How to Analyse Loss Sharing in a Musyarakah Contract from the Income Statement
The musyarakah contract is one of the important instruments in Islamic finance, allowing two or more parties to share capital and risks in a business venture. This article aims to explain how to view and understand how losses are shared in a musyarakah contract through the income statement. We will also include an example of an income statement and detailed…
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Ensuring Halal Investments: Indonesia’s Sharia Stock Screening
The Islamic capital market in Indonesia has experienced rapid growth in recent years. This expansion is driven by increasing public awareness of the importance of investing in accordance with Islamic Sharia principles. Shariah-compliant equity investment has become an attractive option for Muslim investors, offering the potential for halal profits that align with their religious values. However, to avoid riba (usury),…
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Building Your Emergency Fund: A Step-by-Step Guide
Emergency funds are savings that are prepared to deal with emergencies in the future. Emergencies can be unexpected events such as illness, accidents, or job loss. Building an emergency fund is an important part of financial management. Not preparing an emergency fund properly can put you at risk of getting into personal debt. This article will discuss the benefits of…
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Musyarakah Contracts and Capital Guarantee: What You Need to Know
One of the Shariah-compliant cooperative contracts is the Musyarakah contract. This contract involves joint participation in business activities, including sharing profits and bearing losses. However, there are cases where one of the shariks, especially a large investor, asks for a capital guarantee from the business manager when investing in a business. Is this permissible in Shariah? The basic provisions regarding…
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Part-2: Islamic Private Equity: What Contracts Are Used
In the world of Islamic finance, private equity plays an important role as an investment instrument that offers potential profits through equity participation in companies that have not gone public. Islamic private equity operates under the principles of sharia in every transaction, including in the selection of contracts used. In the first part of the discussion, we discussed the contracts…
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