Analysis of the Concepts and Application of Murabahah and Musyarakah Financing in Islamic Banking

Islamic banking offers various Sharia-based financing contracts, yet some are used more often than others. This qualitative literature study analyzes the concept and application of murabahah and musyarakah financing and identifies the factors behind the dominance of one contract in practice, using descriptive-analytical analysis. The literature analyzed comprises 25 references, including books, academic journal articles, fatwas of the National Sharia Council of the Indonesian Ulema Council (DSN-MUI), and other publications on Islamic banking published between 2000 and 2025. Sources were selected for their relevance to the concept and application of the murabahah and musyarakah contracts, their Sharia foundations, and the factors shaping their implementation in Islamic banking in Indonesia. The synthesis of the literature shows that murabahah tends to dominate because it offers margin certainty, carries risks that are comparatively easier to estimate, and makes financing easier to manage and supervise. Musyarakah, on the other hand, represents the principles of partnership and risk sharing through capital participation and profit distribution based on mutual agreement. Its implementation faces challenges in the form of business risk, supervisory complexity, and information asymmetry between the bank and the customer. The dominance of murabahah is also related to considerations of transaction efficiency, risk management, financial stability, and supervisory capacity. Developing musyarakah financing requires stronger governance, greater transparency, and technology to monitor customers’ business performance. This study highlights the gap between the partnership and risk-sharing principles of Islamic economics and a practice that favors certainty and ease of management.