In participation finance sector new approaches for funding and a model proposal

In recent years, some important steps has been taken for the development of the participation finance sector in the world and Turkey. At the beginning of these steps taken for the growth of the participation financing sector is to provide financial resources and product diversity and to apply the necessary legal regulations. These factors have effects on the rapid growth of participation banks, which have the largest share in participation finance sector. Participation banks require having a strong capital structure in order to provide more resources to the national economy and to increase their shares in the banking sector. In this research, the sources of funds which Turkish participation banks provided from domestic and abroad were investigated in the view of such information, current legal regulations and new practices. Furthermore, a proposal for the "Inflation Indexed Loan Account" model has been presented as a new fundraising product. In this study, the results of the interviews investigating the structure of loan account which aims at protecting the Turkish Lira funds of the savers against inflation, its functioning, its difference between other fund collecting products, fiqh bases and applicability in the sector, are included. As result of having been implemented inflation indexed loan accounts model in accordance with Islamic rules and participation banking principles, it is expected that this model will provide long-term funding sources to the participation banks and passive funds which do not include in the financial system will be brought into the economy. With the help of this account, the strengthening of the Turkish Lira and the national economy can be supported by increasing the confidence in our national currency. The results of this study suggest policies for sector representatives and serve as a guiding resource for researchers.