Abstract:

Participation banks, which carry out transactions based on an interest-free banking model, form fund pools through current and participation accounts. These funds are made available to the economic decision units that need financing or tend to save by using a profit share approach. The interest-free finance system, which is a risk-sharing model, has a significant function in minimizing possible instability. The essential motivation of this study is to measure the level of competition between participation banks and conventional banks in the presence of households. For this purpose, quantitative research was carried out with the participation of 1145 people in the NUTS-2 region of the Turkey Statistical Regional Units Classification, with an error margin of ± 2.90% and a 95% confidence interval . The results of the research indicate that the savings preferences of the households are in favor of traditional instruments, the search for an interest-free investment tool continues, the interest sensitivity of the households in terms of financial external dependency, and the brand awareness of participation banks is low. It has been determined that the low level of awareness of participation banks is a significant disadvantage in competition with conventional banks.

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