Mu??rabah in the Historical Trajectory of the Development of Islamic Finance: ?ad?th Sciences Perspective

Abstract

This article discusses mu??rabah as an instrument of financing in Islamic economy in the ?ad?th Sciences perspective. If the study conducted using only the ?ad?th Sciences approach, no ?a??? (sound) ?ad?th of mu??rabah found.  The quality of all the mu??rabah ?ad?ths is ?a’?f (weak). It cannot elevate to ?asan li ghayrih, even though the entire all the chains of transmission (as?n?d) are collected. However, if the study carried out using a historical approach, many sources mention that mu??rabah has existed since the pre-Islamic Arabic era. It continued in the time of Mu?ammad Ibn ‘Abdill?h (pbuh) before becoming the Prophet; and also continued when he (Mu?ammad Ibn ‘Abdill?h [pbuh]) becoming the Prophet, both the Mecca and the Medina period, as well as after the Prophet died. Several of companions reportedly practiced mu??rabah in their daily economic activities. Therefore, the scholars (‘ulam?’) who wrote a study of mu??rabah in a number of their works, stated that the existence of mu??rabah as the financing instrument in Islamic finance, is based on the historical ijm?’; as a continuation of practices carried out since pre-Islamic Arabic. If the study conducted using the Islamic law approach, then the existence of mu??rabah can be proposed in the study of shar’u man qablan? (law before the advent of the Islamic revelation). In the meantime, if the literature survey carried out using the Islamic economic and finance approach, mu??rabah can be concluded as an instrument that can increase the rate of economic growth, employment, and can also decrease the level of income distribution inequality; where the information is in the works of scholars (‘ulam?’) and researchers since pre-Islamic Arab times to the present day.