Developments and Trends of Islamic Banking (Interest Free Banking) in Turkey

Abstract

Participation banking (the official name of Islamic Banks in Turkey) is a banking system in which funds collected from account owners are evaluated in the real economy within the principles of interest-free financing and the profit or loss is shared with the account owners. Islamic banks are organized under and operate upon principles of Islamic law which requires risk sharing and prohibits the payment or receipt of interest.Turkey's Islamic finance sector enjoyed a boom in the years following 2002, with growing demand supported by the republic's socio-political dynamic and large Muslim population.Islamic Banking has been increasing its share in the Turkish financial market

In this paper, the development and trends of the Islamic banks in Turkey and their increasing share in the Turkish financial market will be assessed.