MUDHARABAH: SHARIA-BASED FINANCING MECHANISM FOR SUSTAINABLE ECONOMIC DEVELOPMENT

Research findings on Mudharabah have an effect on sustainable economic development. Implications for Islamic financial policymakers and practitioners are important to promote sustainable economic growth. Future research recommendations on Mudharabah are also needed for better policy development. This research contributes significantly to the understanding and development of Mudharabah and sustainable economy. Mudharabah is a sharia financing mechanism based on fundamental principles that include the concepts of profit sharing, shared risk, and sharia compliance. The concept of profit sharing refers to the sharing of profits between investors and entrepreneurs based on prior agreements. Shared risk means that the risk is shared between the investor and the entrepreneur. While sharia compliance refers to the fulfillment of sharia principles in the implementation of Mudharabah, including prohibitions on usury, gharar, and maysir. Mudharabah also encourages sustainable and responsible business growth by motivating those who manage the business to carry out responsible practices, such as creating jobs, paying attention to workers' rights, and contributing to the environment. These practices help maintain economic stability and contribute to sustainable development. These challenges can be overcome through broader education and effective campaigns to increase public understanding of the benefits and mechanisms of Mudharabah. In addition, the opportunity also lies in the potential for economic growth that can be generated through the Mudharabah application. In practice, Mudharabah can encourage entrepreneurship, the growth of small and medium enterprises, and create new, sustainable jobs. By optimizing and overcoming existing challenges, the Mudharabah application can be an effective instrument in achieving sustainable economic development.