Sharing in Islamic Business

According to Wilson (2006), 'Business structures in the Muslim world are determined by both economic conditions and opportunities, as well as by the values and beliefs of those involved in managing enterprises.'

Usmani (2010) claims that, 'Islam has termed interest as an unjust instrument…' and he asked the following questions: why the borrower should still pay an interest while his business making a loss and why a lender e.g. a bank should accept a fixed interest rate while the borrower made a massive income and the bank money was the main contributor in the business?

Here Islamic teaching defines and recommends business in the form of partnership which is called "Musharakah" to reduce this unjust. It is a form partnership of those partners in the business shares the profits and loss. It emphasizes the cooperative between partners and not  in favor of a particle party.

 If "Musharakah principle" was applied to a bank which holds a huge amount of depositors’ money and no interest rates permitted to earn income, banks will be forced to invest in different projects whether it is new or current. But the bank here is exposed to a risk of loss!

It encourages a bank to diversify its investments since interest is prohibited and that leads to a growth in the economy since money is injected in several business and projects. If the economy grows on average, the investment pool will make profit. Banks here make income from investment not form interest by lending money. No interest rates for the depositors but their income increase in line with the growth in the economy. Thus, Islamic system based in “cooperative” (Sharing) and does not favor rich people. But it works on the principle of sharing which in a way or another leads to justice.