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Liquidity Management Between Participations Banks With the CBRT: A Deposit Purchase Model Proposal

Author

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  • Fatih Kazancı

    (İstanbul Sabahattin Zaim University)

Abstract

Due to the limited availability of deposit (placement) facilities for participation banks at the Central Bank of the Republic of Turkey (CBRT), these banks are unable to manage their excess liquidity as efficiently and profitably as conventional banks. To address this issue, some central banks have adopted various methods such as vadiah, rahn, commodity murabaha/teverruk, and investment wakalah. Among these, the investment agency method stands out as a model compatible with interest-free finance principles and is preferred by certain central banks in their deposit purchase operations. This study examines the similarities and differences in the implementation of the investment wakalah method by three different central banks and proposes a deposit purchase model for the CBRT that aligns with interest-free finance principles. The choice of the investment agency method is due to certain jurisprudential issues associated with alternative methods. The aim of this research is to enable participation banks to make interest-free deposits in both Turkish Lira and foreign currency at the CBRT through the proposed investment agency-based model.

Suggested Citation

  • Fatih Kazancı, 2025. "Liquidity Management Between Participations Banks With the CBRT: A Deposit Purchase Model Proposal," Journal of Finance Letters (Maliye ve Finans Yazıları), Maliye ve Finans Yazıları Yayıncılık Ltd. Şti., vol. 40(124), pages 259-290, October.
    • Handle: RePEc:acc:malfin:v:40:y:2025:i:124:p:259-290
    DOI: https://doi.org/10.33203/mfy.1652817
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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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