Participation banking and its effects on Turkish economy

Participation Banking, also known as Interest-free Banking, is a company that finances the real economy, operates in the financial sector and provides banking services. In the financial system, the opportunity opens up an opportunity for individuals who cannot evaluate their savings and who do not have the opportunity to make investments. For this reason, participation banks were established. Interest-free banking has been established in Egypt in the world as a first in Turkey (Zaim, 2010). this development evolved from 1963 to 1967, and in 1971 it was first renamed. In Turkey, the Islamic banking practices have entered our lives in 1985 and has been with the actions taken by private financial institutions. Interest-free banking in private finance institutions for about 30 years With the legal changes made in 2005, banking law no. The aim of this study is to examine the effect of participation banking on economy. For this purpose, firstly the concept of Participation Banking and its historical development are discussed with examples. Subsequently, a survey was conducted with the Participation Bank and the personnel working in commercial banks and the individuals who had knowledge about the banking system. As a result of the survey, one of the reasons for the fact that participation banking in the financial sector is not at a better level is that there are deficiencies in explaining the correct and understandable way of explaining the applications of the participation bank and the activities of the people. However, as the participation banks were alternative to commercial banks and participation banks were present, the masses that did not prefer commercial banks were reached. With the idea that participation banks will be interest-free, they contribute to the country's economy by introducing the funds of the individuals who prefer participation banks to the economy. Turkey's participation banking has acquired an important place in the financial sector is also observed. Keywords: Participation Banks, Interest-free Banking