Comparison of the participation banking sector in Turkey and Malaysia in terms of financial performance and financial products

The banking sector, which is called Islamic banking in the world and participation banking in Turkey, has continued its growth steadily since the 1960s, when it started to operate, to the present day. Malaysia, which has 9.5% of global interest-free banking assets with a size of approximately $2.8 trillion in 2021, occupies an important position in the sector. In Turkey, which has 2% of the global participation banking assets, the growth rate has accelerated with the entry of public banks into the sector since 2015. The institutions in the participation banking sector, which has an 8% share of the banking sector in Turkey and aims to increase this share to 15% in 2025, continue to develop financial products and make new investments in order to achieve this goal. This study aims to identify the problems faced by the participation banking sector in Turkey and to reveal the steps to be taken for the development of participation banking within the framework of the findings obtained. In this context, the participation banking sectors in Turkey and Malaysia were compared in terms of both financial performance and financial products. In the measurement of financial performance, TOPSIS and Data Envelopment Analysis (DEA) methods were used. According to the results of the TOPSIS analysis conducted with the data between Dec 2013 and 2021; in 2016, 2020 and 2021, the financial performances of participation banking sectors in Malaysia and in other years in Turkey were higher. As a result of the Data Envelopment Analysis (DEA) conducted to determine the effectiveness of participation banking sectors, it was concluded that all participation banks except one of the banks in Malaysia included in the analysis are active, and all of the banks included in the analysis from Turkey are inactive. In the study, financial products and applications in participation banking sectors were compared and similarities and differences were revealed in terms of countries.