Problems and solution proposals of participation banks in Turkey

Interest-free banking practices are also commonly known as Islamic banking. The main feature of these practices is that, unlike traditional banking practices, they do not include interest. At the beginning of the establishment goals of participation banks, especially people who stay away from interest due to their religious sensibilities, bring to the economy the idle savings that do not participate in the economy. The first participation Bank practice in the world was observed in Cairo in 1972 as an example of "Nasser Social Bank". In Turkey, it is known that the establishment of these banks began in 1983 and that the First Private Financial Bank, Albaraka Turkish financial institution, became operational in 1985. Private financial institutions in Turkey were named as "participation banks" by the Banking Law No. 5411, which entered into force in 2005, and the title of the Association of private financial institutions was changed to "Association of participation banks of Turkey". 9 participation banks have been established in Turkey. 6 of them continue their activities today. The aim of this study is to examine the problems of participation banks in Turkey and to provide solutions. Resource scanning was preferred as a working method. The scope of the study was limited to the participation banks seen in the banking sector in Turkey from its inception to the present day. The study found that participation banks were born out of an important need, such as actively transferring passive savings in people's hands to the economy in order to convert them into investments.