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Profitability of Interest-free vs. Interest-based Banks in Turkey

Author

Listed:
  • Soylu, Ali
  • Durmaz, Nazif

Abstract

Islamic banking is consistent with Islamic law and guided by Islamic economics. They are prohibited from charging or paying interest, and can operate only on the basis of the profit-sharing arrangements. Islamic banking has been gaining momentum on a global scale for the last 30 years. It is estimated that the assets of Islamic banks in Turkey will exceed US$25 billion in the next decade and will make up 10% of the total banking system. Therefore, this study compares Islamic banks with interest-based banks to measure their profitability. It also investigates how Islamic financing techniques are used by Islamic Banks.

Suggested Citation

  • Soylu, Ali & Durmaz, Nazif, 2012. "Profitability of Interest-free vs. Interest-based Banks in Turkey," MPRA Paper 36376, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:36376
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    File URL: https://mpra.ub.uni-muenchen.de/36376/1/MPRA_paper_36376.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Turkish banks; interest-based banking; interest-free banking; Islamic banking;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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