Musharakah is a partnership contract in conducting business; based on capital and labour contribution by the investor and entrepreneur through a profit and loss sharing (PLS) agreement. These concepts are also similar to the conventional venture capital principle, which is expanding in Malaysia. According to Ibnu Arfa (1984), Musharakah is an agreement between two or more persons carrying on a particular business to share profits in their investments. However, the use of Musharakah contracts is increasingly being eroded in Islamic banking. This can be proven by looking at the products offered by Islamic financial institutions. Therefore, this study aims to explore the current application of Musharakah contracts on venture capital in Islamic financial institutions. It also explores the possible innovation to improve the application of Musharakah contracts on venture capital. Qualitative research through a systematic review of relevant literature was conducted during this study.
Asadov, A. I. (2022). COVID-19 and Resilience of Islamic Home Financing: Enhanced Musharakah Mutanaqisah (EMM) Model as an Example. In Towards a Post-Covid Global Financial System. Emerald Publishing Limited.
Rahman, A. A., Nor, S. M., & Salmat, M. F. (2020). The application of venture capital strategies to musharakah financing. Journal of Islamic Accounting and Business Research.
Asadov, A., Sori, Z. B. M., Ramadilli, S. M., Anwer, Z., & Shamsudheen, S. V. (2018). Musharakah Mutanaqisah home financing: issues in practice. Journal of Islamic Accounting and Business Research, 9(1), 91-103.
Ali, A., Shafi, M., Tabasam, A. H., Ashiq, A., & Shabbir, M. S. (2022). Trends and volume of successful application of Musharakah as a significant mode of financing in Pakistan: A case study of Meezan bank limited. Journal of Public Value and Administrative Insight, 5(2), 467-482.
Abdul-Rahman, A., & Nor, S. M. (2016). Challenges of profit-and-loss sharing financing in Malaysian Islamic banking. Geografia, 12(2).
Abdul-Rahman, A., & Gholami, R. (2020). Islamic finance and COVID-19 recovery: The role profit-loss sharing contract. Jurnal Pengurusan, 59, 7-10.
Black, S. B., & Gilson, J. R. (1998). Venture capital and the structure of capital markets: banks versus stock markets. Journal of Financial Economics, 47, 243-277. doi:10.1016/S0304- 405X(97)00045-7
Recklies, D., & Recklies, O. (2000). The Venture Capital Industry: Analysis and Future Development. https://www.themanager.org/pdf/vc.pdf [25 November 2022].
Rahman, N. R., Sitepu, N. I., & Syukri, S. S. (2022). Implementation of Musyarakah Mutanaqisah Agreement in Syariah Banking (Case Study of BTN Syariah Banda Aceh). At-tijaroh: Jurnal Ilmu Manajemen dan Bisnis Islam, 8(2), 224-242.
Narayanasamy, C., Hashemoghli, A., & Rashid, M. R. (2012). Venture Capital PreInvestment Decision Making Process: An Exploratory Study in Malaysia. Global Journal of Business Research 6 (5), 49–64.
Nafi'ah, M. N., & Azis, A. A. (2022). MANAJEMEN PEMBIAYAAN MUSYARAKAH MUTANAQISHAH PADA KSPPS AL-BAROKAH KABUPATEN BLORA. Jurnal Al-Kanza: Journal of Islamic Finance and Banking Science, 1(1), 1-8.
Warninda, T. D., Ekaputra, I. A., & Rokhim, R. (2019). Do Mudarabah and Musharakah financing impact Islamic Bank credit risk differently? Research in International Business and Finance, 49, 166-175.
