In a fixed-interest loan, the financier remains a creditor and claims the agreed return regardless of the business result. In partnership (مشاركة), the financier becomes a participant in the venture.
If the venture performs well, the agreed profit share may rise with actual profit. If the venture suffers a genuine loss, the investor cannot remain completely isolated from that loss.
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partnership (مشاركة): Meaning, Purpose and Types
In a fixed-interest loan, the financier remains a creditor and claims the agreed return regardless of the business result. In partnership (مشاركة), the financier becomes a participant in the venture.
If the venture performs well, the agreed profit share may rise with actual profit. If the venture suffers a genuine loss, the investor cannot remain completely isolated from that loss.