Representations of individual customers to choose participants in credit uses

Interest-free banking was first put into practice in Egypt in the 1970s, following a gradual process of remarkable development and transformation. Participation banks, which have become more prevalent under the name of "Interest-free Banking", first came into operation in Muslim countries, and today they are gaining importance across the world as a means of building up savings. Participation banks first appeared in Turkey under the name of "Özel Finans Kurumu (Private Financial House)" founded in 1983. Since the amendments to the Law of Banking No. 5411 in 2006, such banks have become known as "Participation Banks". Due to the fact that it is subject to the Law of Banking and that it has equal rights to commercial banks in terms of legislations, Participation Banking has come to compete with classical banks. Also called Interest-free Banking or Islamic Banking, Participation Banking is rapidly gaining itself a prominent place in world markets. Even though there have been several recent studies based in Turkey on participation banking, none of these has focused on individuals' preference for loan demands. Hence, this study aimed to determine the reasons for individuals' preference for participation banks in their use of loans. For the purposes of the present study, data were collected through a five-point Likert-type questionnaire consisting of a total of 44 closed-end questions in two sections which was conducted in the province of Bolu. Determining different segments was the primary aim of the chosen method for sampling. The data gathered from the questionnaire was analyzed through SPSS package software. Relevant statistical methodology, namely descriptive analysis, factor analysis, t-test, and Pearson correlation analysis, were applied in order to summarize sample data, to determine validity and reliability of the scale, to determine deviations of variables from the median, and to measure the significance level of the correlation between the dependent and independent variable, respectively. Variance analysis was carried out to determine whether factors influencing the choice of participation banks in obtaining loans differed according to demographics (independent variable), followed by Post Hoc (Tukey) test to identify which two variables led to the difference in cases where variance analysis revealed differences. The findings of the present study indicate that the most significant factor that influences individual customers' choice of participation banks in their obtaining of loans was the application of interest-free banking. Demographic attributes were found to have significant effects on customers' preference of participation banks. Future studies could compare individual customers with corporate customers by including corporate customers in their study samples.