Development of participation banks in Turkey and selected country examples

The aim of this study is to reveal the development of the participation banking system in Turkey and its comparison with conventional banks within the framework of selected countries. Participation banking came to the fore around the world in 1960 and was first implemented in Egypt in 1976. While participation banks operated especially in Muslim countries when they first started to serve, today they have an important functionality around the world in order to meet various needs. It is seen that participation banking started to take its place in the economic system in Turkey with the decree law numbered 837506 issued in 1983. The first participation bank was established under the name "Special Finance Institution" and subsequently took the name "Participation Banks" with the amendment made in the Banking Law No. 5411. It can be said that participation banks in Turkey gained great momentum after the 2001 economic crisis. Participation banks have been able to compete with conventional banks since this date. The reasons for this include the fact that participation banks are subject to the banking law and have equal rights in terms of legislation with conventional banks. Key Words: Participation Banks, Conventional Banks, Interest-free Principle, Murabaha Method.