Working of deposit and loan in interest-free banking: A research on public banks

The share and effectiveness of the financial system in the world economic system is increasing day by day. The biggest actor of the financial system in today's world is undoubtedly the conventional banking system. Since the conventional banking system uses interest and interest-based products, it has led people with Islamic sensitivities to use Islamic or Islamic financial products other than traditional banking.At the forefront of these products are the participation banks, which transfer the funds held by the savers to the financial system and turn them into loans to make a profit.Although the deposit and loan operation of participation banks is similar to the traditional financial system, there are significant differences in operation.In this direction, in this study, the deposit and loan functioning of public participation banks in the interest-free banking system will be examined and the differences from the traditional finance system in the context of purpose, institutional structure, interest-free finance and income model, customer profile, products and services, regulation and supervision, risk management and global prevalence will be tried to be revealed. As a result of the study, it was concluded that the interest-free instruments used by the banks that act with the principles of interest-free banking for Turkey are somewhat lacking compared to the participation banks operating around the world, and it is suggested to diversify the interest-free products.