RUNNING MUSHARAKAH: A COMPREHENSIVE ANALYSIS OF A VERSATILE ISLAMIC FINANCING TOOL

Abstract

This article explores Running Musharakah (RM), a unique Shariah-compliant financing solution within Islamic banking, highlighting its historical development, operational features, merits, demerits, and practical applications in various business sectors. RM emerges as a versatile alternative to conventional financing, offering flexibility for both short-term and long-term needs while fostering a true partnership between banks and businesses. The article discusses RM's adaptability across multiple industries, simplified documentation processes, and potential for ongoing financial support. Despite its advantages, RM faces significant challenges, including high risk, compliance complexity, delayed profit distributions, and limited accessibility for startups. To maximize its potential, the article proposes targeted reforms focused on enhancing Shariah governance, establishing dedicated standards, promoting a documented economy, standardizing compliance protocols, and raising public awareness. This comprehensive analysis emphasizes the critical role of RM in the Islamic finance landscape and its alignment with contemporary economic needs.