Commodity Mudharaba

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Commodity Mudharaba

In Islamic finance, a mudharaba contract in which the provider of capital gives the entrepreneur the initial investment in kind. For example, the provider of capital may give initial inventory and supply computers. In any mudharaba, a provider of capital agrees to invest in an entrepreneur in exchange for a portion of the profit of the entrepreneur's venture. Most Islamic law scholars reject the use of commodity mudharabas because they do not utilize cash.