Equity based financing in the changing world and its place in participation banks

This PhD thesis examines the relationship between economic political developments and financing methods. Financing has undergone many form changes through religious, social, environmental factors in the historical process and continues to change. In this study, new business models, common resource usage that are thought to develop with industry 4.0, technological revolution and digitalization and the reflections of these developments on financing methods are examined. In the context of the hypothesis that equity based finance will be more commonly used, the historical background of equity based finance in Islamic economics and the approach of Islamic economics to equity and debt based financing are examined. Afterwards, the existing products and services in the participation banks were examined in terms of being equity and debt based, and the strategies of the participation banks in new finance approaches were examined. It is a well-known fact that the risk-sharing and equity-based finance approach, which is at the core of Islamic Economics, has just a small share in the financing provided by participation banks. In this context, the reasons of the participation banks' focus on debt-based finance instead of equity-based finance were analyzed through semi structured in depth interview. Again, from the perspective of participation banks executives, the potential gains of participation banks by extending equity-based financing are discussed. Subsequently, a model is proposed for participation banks to expand equity based financing.