The place and use of mudarabah in financial technologies and participation banks

Economics develops methods for the effective distribution of scarce resources. However, contemporary economic science asserts the scarcity of resources, a perspective that requires reassessment. According to Islamic economics, Allah has provided sufficient resources for humanity on Earth, and the proper utilization of these resources can alleviate many economic problems. Conventional economics prioritizes individual profit in the use of scarce resources, whereas Islamic economics focuses on societal development. The conventional financial system aims to maximize profits by using interest as its primary instrument, which can put borrowers in difficult situations. In contrast, Islam prohibits interest-based borrowing and offers partnership-based methods to address financial needs. In this context, the Islamic financial system relies on partnership models such as mudarabah and musharakah. However, it is observed that participation banks today mainly focus on lending, which does not sufficiently serve the societal development goals of Islamic economics. This study proposes solutions based on partnership-oriented approaches and the utilization of fintech for addressing the financial needs of individuals and institutions. The objective of the study is to develop an innovative financial method that enhances societal development and welfare. It recommends leveraging fintech instead of the traditional banking system for partnership-based financing, as fintech provides a significant platform for such financing and offers an alternative to conventional financial institutions. Keywords: Mudarabah, Islamic Fintech, Crowdfunding, Participation Banking