The evaluation of participation banking practices using multi-criteria decision-making methods within the framework of AAOIFI shariah standards

Participation banking is an interest-free banking model that conducts financial transactions in accordance with Shariah principles. In this field, the Shariah standards published by AAOIFI serve as a foundational reference for structuring and auditing products. This study aims to determine and compare the compliance levels of participation banks operating in Turkey's interest-free banking sector with AAOIFI Shariah standards. Within this scope, the theoretical foundations of interest-free banking are examined, along with its historical development globally and in Turkey. The importance of standardization and adherence to these standards in interest-free financial practices is critically discussed. In this research, 61 Shariah standards issued by AAOIFI were evaluated through the Delphi method, involving expert consensus, and categorized into six main groups based on thematic similarities. To determine the relative importance weights of these categories, the Best-Worst Method (BWM), a multi-criteria decision-making (MCDM) technique, was employed. In the final stage, the compliance levels of Turkish participation banks with AAOIFI Shariah standards were analyzed using two fuzzy logic-based ranking methods: Fuzzy TOPSIS and Fuzzy PROMETHEE. These analyses provided an objective and systematic evaluation of both the relative weights of the standards and the extent of banks' adherence to them. The findings reveal that participation banks in Turkey demonstrate partial compliance with AAOIFI Shariah standards, though discrepancies exist in their practical implementations. The MCDM-based analyses offer strategic guidance for policymakers and practitioners, emphasizing the need to strengthen standardization and oversight for the sustainability of interest-free finance. This study also contributes methodologically to the literature by integrating structured expert judgment and advanced decision-making techniques. According to the results, Banks A6 and A3 exhibited the highest compliance levels, whereas Bank A4 scored the lowest, indicating significant variations in adherence across institutions. These outcomes underscore the necessity for harmonized regulatory frameworks and enhanced transparency to align practices with global Islamic finance benchmarks.