The analysis of the efficiency and productivity of İslamic banks operating in Turkey by using the multi criteria decision making methods

ABSTRACT The Islamic Banks, which are initially being established in order to bring the anti-interest Muslim societies savings in to the economy, have now become able to serve both Muslim and non-Muslim societies. Islamic Banks have been successfully operating in Asian, African and Western countries, aiming to achieve the social and economic goals of society by establishing a balanced financial system. The reason why Islamic Banks are spreading very quickly is the fact that they are striving for the principle of closing the economic gap between the societies without taking and paying interest. The Islamic Banks in Turkey were initially founded with the name "Private Financial Insitutions" in a law enacted in 1983. In 2001, the Private Financial Institutions had became subject to the Banking Law and got equal rights with commercial banks. With a recent amendment made in 2005, the name of the Private Financial Institutions has been changed to "Participation Banks" because of its insufficiency to explain Islamic Banking transactions. Islamic Banks, like other financial institutions, are institutions that act as intermediaries between fund suppliers and fund demanders. Due to increased competition among financial institutions, it has become a necessity for institutions to carry on their activities effectively and efficiently. In this respect, Islamic banks have to continue their activities successfully in a highly competitive environment. For this reason, the effectiveness and productivity analysis of Islamic banks is highly important. In this study, it is aimed to make perfomance ranking of Islamic Banks operating in Turkey based upon their effeciency and productivity rates between the period 2007-2016 by using Multi-Criteria Decision Making Method's Fuzzy TOPSİS Method and Shannon Entropy. Albaraka Türk, Türkiye Finans and Kuveyt Türk wich operated continiously in the respective period were taken into evaluation. The Ziraat Participation Bank and Vakif Participation Bank, due to starting their operations in 2015 and 2016 respectively, their data is not analysed in the study. Keywords: Islamic Banking, Participation Banks, Sukuk, Fuzzy TOPSIS Method, Shannon Entropy.