what is musharakah 
musharakah is a joint enterprise or partnership structure in islamic finance in which partners share in the profits and losses of an enterprise since islamic law sharia does not permit profiting from interest in lending musharakah allows for the financier of a project or company to achieve a return in the form of a portion of the actual profits according to a predetermined ratio however unlike a traditional creditor the financier also will share in any losses should they occur also on a pro rata basis musharakah is a type of shirkah al amwal or partnership which in arabic means sharing understanding musharakahmusharakah plays a vital role in financing business operations based on islamic principles for example suppose that individual a wants to start a business but has limited funds individual b has excess funds and wishes to be the financier in musharakah with a the two people would come to an agreement to the terms and begin a business in which both share a portion of the profits and losses this negates the need for a to receive a loan from b musharakah is frequently used in in real estate deals the partners request from a bank an assessment of the property s value via imputed rent the sum a partner might pay to live in the property in question profits are divided between partners in predetermined ratios based on the value that was assigned and the sum of their different stakes every party that puts up capital is entitled to a say in the property s management 