Qard Hasan fund practices in Turkey: A qualitative study

Debt is a kind of relationship among people which, exist in every period of history. The hierarchical structure inherent in the debt relationship, causes lenders to benefit from this relationship. In today's financial system, interest-bearing debt account for exactly for this benefit. The debt transactions which are mostly based on interest, cause economic and social problems. However, interest is prohibited in Islam. Islamic economics recommends qard hasan (benevolent loan / interest free loan). Qard hasan means a beautiful loan which refers to the payment of a loan with the same amount. The main aim of the qard hasan is to win the pleasure of Allah and to provide for the need of the borrower. Since qard hasan is not a profitable transaction, it is used in a very limited area in Islamic finance. Qard hasan practices are mostly implemented through non-governmental organizations, Islamic micro-finance institutions and saving & aid funds. In addition, qard hasan can be a transaction carried out by individuals with close friends and with the people they trust, while güns and saving & funding practices of individuals are among the samples of qard hasan. The main aim of this study is to reveal the purpose and the process of the establishment of formal and informal qard hasan funds. In this study, seven qard hasan fund cases, three of which are official and four of which are informal, are discussed. In order to gain in-depth knowledge about these examples, the qualitative research method, the phenomenological approach, was preferred. Semi-structured interviews were conducted with qard hasan fund managers and members to understand and interpret the phenomenon of qard hasan fund from prevalent and common experiences. The qard hasan funds have been evaluated in terms of establishment processes, fund collection methods, funding rules and sustainability measures. It is expected that the qard hasan funds we examine will make important contributions to the Islamic economics literature in terms of both their long-term experience and their success and authenticity.