The place operation and performance analysis of the participation bank in banking sector in Turkey

Having appeared as a concept 50 years ago from now on, the interest-freebanking system began to be implemented in 1970's after the stage of conception. Beingincorporated with the permission of the decree law in 1983 in Turkey (in our country),Participation Banks former Private Financial Corporations have shown considerableimprovement throughout the world especially in the last decade.Today, the interest-free banking system has noticeably developed not only inIslamic countries but also in the ones particularly in England (Great Britain) and USAwhere financial sectors have been extremely enhanced. Important banks around theworld are including inert petrodollars in the Middle East by opening interest-freebanking departments in their own stocks.Participation Banks have shown great progress especially since 2001 and havereached to the capability to compete with other commercial banks. The change madein 1999 and 2000 to make Participation Banks amenable to law no 4389 on banking lawand Participation Banks' having the equal rights with commercial banks play a greatrole in the Participation Banks' this situation.In this study, the process of the development of the Participation Banks in theworld and in Turkey is mentioned, the information about the system of collecting thefunds and the system of using those funds in this kind of banks are given and theperformances of the Participation Banks in terms of the period between 2001-2005when they showed substantial improvement are assessed and analyzed. Furthermore, inthis study, the performances of both the Participation Banks and commercial banks areassessed by comparing their general qualities.