Abstract:

Participation banks, called "Islamic Finance" or "interest-free banking", have been a part of the development of the Turkish economy in the thirty-five years since 1985. Due to the interest sensitivity of the conservative society, idle funds that were not included in the banking system were brought into the economy.The study analyzed the contributions of participation banks to the Turkish economy after analyzing the advantages and disadvantages of deposit banks and participation banks in terms of their asset and liability structures. The period used for this research was 2005 to 2020, the year that participation banks were initially integrated into the banking system. When examining the areas in which loan portfolios are concentrated and the participation banks' portion in the financial sector, the risk, and profitability of the banks were assessed and compared to deposit banks. According to the asset structure, since the share of deposit banks in the entire banking system has been 93-94% in the last ten years, it has been observed that the share of participation banks in the sector is between 6-7%. According to the loans given by the banks, it is seen that the deposit banks concentrate on the service, finance, manufacturing, and construction sectors, while the participation banks concentrate on the service, manufacturing, and construction sectors. The analyzed data revealed that participation banks have some problems with both deposit collection and loan distribution systems.

Keywords: