Evaluation of participation banking in Turkey over performance and positioning and suggestions for growth

Abstract

Although the vast majority of the population in Turkey is Muslim, participation banking has been assuming very low market share among the entire banking market. Due to the inappropriate nature of interest-based banking products at conventional banking and the Islamic beliefs being against the use of these types of banking products, it could be expected that the participation banking sector should have at least as much market share as the conventional banking; however, in Turkey the reality have been just the opposite. It is required to determine the causes of this situation and to develop solutions for making the necessary improvements. To satisfy this requirement, in this study, we used two different methods to detect the problems and propose solutions. First, interviews were conducted with senior executives from the sector and the current situation of the sector was described. Moreover, evaluations on the human capital and positioning of the participation banking were obtained, along with potential innovations and transferrable applications from the other countries.