Comparison of foreign trade transactions of conventional banks and participation banks

The financial adequacy of enterprises is an important issue affecting their ability to make foreign trade. Businesses need financing to pay for the goods and services to be imported or to cover the costs incurred while producing the goods to be exported. Firms may turn to foreign sources for the financing they need due to the insufficiency of their own funds or in terms of cost. In most cases, foreign resources are obtained from banks. In addition to providing financing, banks play an intermediary role in the delivery and payments of enterprises engaged in foreign trade transactions. Participation banks, which started their activities in Turkey in 1985, continue their activities with the principle of interest-free and differ from conventional banks in this respect. Discussions about riba and interest are increasing day by day, and the literature on comparing the two types of banks from different perspectives is enhancing. However, the limited number of studies on the role of conventional and participation banks in foreign trade transactions makes it important to examine the subject in this context. With this importance, it is aimed to compare foreign trade transactions in terms of conventional and participation banks, present suggestions to regulatory authorities with the findings, and contribute to the literature. Within the scope of the study, the comparison of foreign trade transactions in terms of conventional and participation banks was made with content analysis. As a result of the analysis, it has been determined that the application of foreign trade delivery and payment methods between the two types of banks is generally the same, the main differences are in terms of shape, and foreign trade financing methods are generally the same. It has been observed that some of the foreign trade financing methods can be applied in only one of the banks, and the differences in the bank applications of the co-financing methods are maturity, limit, currency type, and cost.