Effects of the central advisory board on participation banking governance: An analysis of the Turkish experience

This thesis aims to examine the effects of the Central Advisory Board (CAB), which was established in 2018 within the Participation Banks Association of Turkey, on the shariah governance structure in the participation banking system. The increasing importance of Islamic finance on a global scale, the need for institutionalization in the field of interest-free finance in Turkey, and the central role of the CAB in this process were decisive in the selection of the thesis topic. In particular, the differences in fatwa, the lack of shariah standards and the disorganization in supervisory structures in the sector made it necessary to investigate the functionality of this structure. Both theoretical and applied methods were utilized in the thesis writing process. In the first stage, the concepts of Islamic finance, participation banking and shariah governance were analyzed in depth through a literature review. Then, the structure and functioning of the CAB in Turkey were evaluated and analyzed in comparison with the central advisory boards in countries such as Malaysia, Saudi Arabia and Iran. In the practical part, in-depth interviews were conducted with eight experts in the field of Islamic economics and finance and the qualitative data obtained were evaluated through SWOT analysis. In the light of the data obtained throughout the thesis, it has been determined that the CAB plays a critical role in terms of sectoral regulation and shariah standardization but has room for improvement in areas such as binding decisions, institutional independence and transparency. In this context, various policy recommendations have been developed and solutions have been proposed to contribute to the institutionalization of interest-free finance in Turkey.