Sharia and Legal Regulations of Musharaka Financing

This article examines the Sharia and legal controls governing Musharaka financing as a core participatory finance instrument based on profit-and-loss sharing. It clarifies the concept of Musharaka, its legal basis, and its main advantages, then discusses key contractual conditions, profit distribution mechanisms, loss allocation rules, and the principal forms of Musharaka (permanent and diminishing). It also highlights the Moroccan regulatory framework—particularly Law No. 103-12 and Bank Al‑Maghrib guidance—and the practical challenges faced by banks in implementation.