An analysis of the perception of participation banking from a behavioral economics perspective

Although the market share of participation banking in Turkey has exhibited a steady upward trend each year, it has yet to reach the aspirational level. Numerous scholarly investigations have been conducted to elucidate the underlying factors contributing to this outcome. The aim of this thesis is to evaluate the Participation Banking preference with the perspective of Behavioral Economics and to examine how it changes under the "framing effect" and the effect of this situation on Participation Banking. An experimental study was conducted in the research and consists of two groups as the control group and the experimental group. Both groups were asked the same financial result question regarding the Participation Banking preference. However, the experimental group was made to pre-read the text containing the framing effect before the question. According to the results obtained; while the control group preferred 69% Conventional Bank, 31% Participation Banking; the experimental group preferred 72% Participation Banking and 28% Conventional Bank. This result shows that the framing effect created a serious change in the Participation Banking preference. Similarly, a positive change of 9% was observed in the responses given to the questions measuring the perception levels of the participants about Participation Banking in the continuation of the experiment. As a result of the obtained results, policy recommendations are presented for the adoption of Participation Banking by a wider audience. The study reveals that the Behavioral Economics approach and the framing effect in particular have an effect on financial preferences and contributes to the development of more effective communication and marketing strategies in the field of Participation Banking. It is evaluated that the study will contribute to the Perception and Awareness theme, which is also included in the Participation Finance Strategy Document, by providing important outputs for application in the management of perception and increasing preference for Participation Banking.