Derivative product use in participation banks during Covid 19

Participating in the Turkish financial system in the 1980s, and showing a significant growth ecently with the cyclical effects of societies, participation banks ensure that idle funds that cannot be valued in the economy due to interest rate sensitivity are included in the real economy. First of all, starting to operate in Islamic countries, the main point of emergence in participation banks, where Islamic procedures and principles are adopted as a principle, has been accepted as the interest-free principle. Participation banks, which fulfill their authority to support the economy through profit-loss sharing, continue their activities on their own axis according to the orders of the Islamic Religion and thus interest-free or Islamic banking conditions. Participation banks, which have developed internationally, have continued their development by gaining popularity in Turkey as well. However, over time, the barriers to the international circulation of capital have been removed and the globalization of the markets, and the effect of technological developments, the risk factor has gained an important place in the finance sector. Especially since the 1970s, the collapse of the Bretton Woods system and the transition to the floating exchange rate system, the management of risks in price fluctuations caused by the oil crises and the use of derivative products in order to protect from the effects of losses caused by uncertainties played an active role in the financial system. The uncertain environment that emerged with the Covid-19 pandemic, which has gained a global dimension since 2019, has created vulnerabilities in the national economies and the financial sector, resulting in imbalances in global markets. After this uncertain process, the management of the risks that the economic activities and the financial sector will face was carried out through derivative products. In this study, first of all, the basic lines of participation banking are explained and then derivative products that play an active role in the management of the risks they encounter during their activities are included. Today, the use of derivative products in the world and in Turkey has been explained and their compliance with Islamic principles has been evaluated in the name of risk management in participation banks of the Covid-19 pandemic, which creates a serious risk factor in the markets and affects all sectors by playing an active role on the financial sector.