Risk evaluation and management of saving-based interest-free financing systems

The Savings-Based Financing system is a financing method that has been applied abroad, especially in Europe, under different names in various ways for many years and is considered quite successful in the field of housing finance. The system saving based on basic concepts such as savings, solidarity and cooperation is not new to Anatolian culture, but also in terms of innovative features which it carries has achieved a rapid growth momentum as a new financing model in the field of interest-free finance in Turkey. Since the mid-1980s by the effect of the credit system becoming easier and widespread, society of Turkey who prefer fast consumption without savings, or rapid growth without own resources, due to the negativities of the credit system, which was later understood has started to find this system attractive based on savings and cooperation in recent years. The number of such firms has increased rapidly due to the increasing interest. Although private institutions which are implementing the cooperation system based on savings, are mainly mediate the transfer of funds, shows that they have a significant risk potential, since they are not yet regulated within the scope of the financial system and do not have an effective risk management. This study is emphasized on the risk potential of institutions working with the savings based Interest-Free Finance system, which has an important place in the country's economy and claimed to be an important institutional pillar of Islamic finance, and also focused on how an effective risk management can be implemented in accordance with Islamic finance rules. The financial risk of this sector has been tried to be revealed with the actual financial data and reports of the firm that has the size and experience to represent the sector. Of this sector in Turkey, by the effect of lack appropriate legislation leads to cause both unmanaged financial risks and fiqh objections. Although they function as financial institutions in terms of structure and operation, the fact that companies are defined only as organizations, puts them within the scope of the Turkish Commercial Code and causes these institutions to not make accounting plans and reporting in accordance with financial institutions. As a result of the study, suggestions were made on the institutional and supervisory regulations required for this sector to have a more effective risk measurement and management.