The performance effects of public capital infusion to participation banking: A panel analysis in Turkish market

In today's world, with the effect of globalization, international trade continues to increase day by day as well as the trade done within nation. SMEs (Small and Medium Sized Enterprises) are one of the important elements in commercial activities carrried out on a national and international level all over the world. The operations must also be strong to get ahead as a country in this trade, which takes place on a national and global basis, with SMEs an importants drivers of the economies, to ensure sustainability and to increase foreign trade. A strong financial structure is the most important basis for SMEs, and therefore national economies, to have these qualifications. The banking system plays an active role all over the world in order to meet the financing needs on time and under appropriate conditions when their own equity capital is not sufficient. Businesses can achieve competitive power at national or international level thanks to the financing of the banks, which are the most important actors of the financial sector, by transferring capital to enterprises with the financing they find from abroad. Recently, participation banks, as well as conventional banks, have started to make a name for themselves in the field of financing, increasing their support to the real sector every year. The Turkish participation banking sector, which until recently was dominated by only private and foreign-owned banks, the rapid entry of the public authority to the sector's revival and increasing volume in the last period, closing the gap between the sector and the conventional system and providing a dynamism to the sector gain has occurred. With the aim of observing this process over the years with performance indicators, analyzes were carried out using the dynamic panel data analysis method with the data between the years 2010: Q1-2020: Q2 in order to measure the effect of the entry of state-owned participation banks into the sector. As a result of the study, it is observed after the analyzes that the entry of public capital into the sector has a negative effect. From this point of view, state-owned participation banks can make a positive contribution to the sector by becoming more widespread and creating an economy of scale effect. At the same time, public participation banks can obtain more resources from domestic and abroad by using the state authority. In this context, it is thought that it will make an important contribution to the sector by providing an advantage.