Development of participation banking in Turkey: A study on Kuveyt Türk

This thesis aims to explore the evolution and performance dynamics of the participation banking sector in Turkey, with a particular focusing on the case of Kuveyt Türk Participation Bank. The study analyzes the role of participation banking within the financial system, its connection with the real economy, and its contribution to sectoral development from both theoretical and practical perspectives. The essential functions of the banking industry and the distinctive structure of participation banking grounded in interest-free finance principles are discussed, and the establishment of this system in Turkey, its legal framework, resource collection and allocation mechanisms, and the elements shaping its sectoral transformation are examined comprehensively. In the last part of the research evaluates Kuveyt Türk's institutional progress, financial growth indicators, diversification of products and services, digitalization capability, and contributions to the national financial architecture. Comparative data analyses were carried out to assess the bank's branch and personnel numbers, funds raised, the composition of its financing methods, its retail banking performance, and its position within the participation banking field. Additionally, Kuveyt Türk's social responsibility initiatives, innovation activities, financial technology investments, and international partnerships were reviewed to highlight the bank's influence on both the Turkish economy and the global participation finance landscape. This study used document and data analysis methods. Through this method, academic publications, reports, official statistics and data from relevant institutions were systematically examined. The aim of choosing this method was to comprehensively evaluate the accumulated knowledge on the subject. The findings of the study indicate that Kuveyt Türk is one of the leading institutions propelling the advancement of the participation banking sector in Turkey. The bank's effective use of real-sector-oriented financing models, risk-sharing approach, expanded product variety, adaptability to technological change, and capability to access international funding sources considerably strengthen its competitiveness within the sector. The evaluation results reveal that Kuveyt Türk has made noteworthy contributions to the institutionalization of the sector, the enhancement of financial inclusion, and the wider implementation of interest-free financing. In this respect, the study presents an integrated framework describing the structural transformation of participation banking in Turkey and offers important insights for the future of the sector through the example of Kuveyt Türk.