Title: Smart contract-based Islamic Fintech model for Mudaraba financing

Authors: Mustafa Raza Rabbani; Hana Bawazir; Shahnawaz Khan; Sitara Karim; Daouia Chebab

Addresses: College of Business Administration, University of Bahrain, P.O. Box 32038, Sakhir, Kingdom of Bahrain ' College of Business Administration, University of Bahrain, P.O. Box 32038, Sakhir, Kingdom of Bahrain ' Faculty of Engineering, Design and Information and Communications Technology, Bahrain Polytechnic, Bahrain ' Department of Business Administration, Faculty of Management Sciences, ILMA University, Karachi, Pakistan ' Finance and Economics, College of Business Administration, University of Bahrain, P.O. Box 32038, Sakhir, Kingdom of Bahrain

Abstract: The purpose of this study is to explore the possibility of applying smart contracts in Islamic finance transactions and to explore the application of smart contracts in Mudaraba contract. Mudaraba financing is an ancient Islamic contract where one party known as Rabb-Ul-Maal provides the fund to the other party known as Mudarib to do the business on his behalf and share the profit on agreed terms and conditions. The study is an exploratory in nature as it explores the possibility of Islamic finance tool 'Mudaraba' to fight the adversities of COVID-19. Based on the extensive review of literature, the study proposes a Fintech model based on smart contract for Mudaraba transactions. The study will help in better understanding and application of smart contract in Islamic finance. It will also help the users of Islamic finance services to grab the opportunity and adopt the smart contract technology in their business practices. The proposed model can be a useful tool in fighting the adverse effects of disasters like COVID-19, war and earthquake, etc., and it will help in uplifting the standard of living of the poor by creating employment opportunities and contributing to the GDP.

Keywords: Mudaraba; Islamic finance; Fintech; smart contract; blockchain; pandemic; COVID-19.

DOI: 10.1504/IJBIR.2025.144391

International Journal of Business Innovation and Research, 2025 Vol.36 No.2, pp.248 - 262

Received: 06 Mar 2021
Accepted: 15 Jun 2021
Published online: 11 Feb 2025 *

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