News / Europe

Turkey Seeks to Benefit From Islamic Banking Sector

People shop in a shopping district in Hatay, Turkey, May 17, 2013.
People shop in a shopping district in Hatay, Turkey, May 17, 2013.
TEXT SIZE - +
Dorian Jones
— With the international economic crisis continuing to bite, the Turkish government has announced it will be seeking to tap into the $1 trillion Islamic financial industry.

Although Turkey is a secular state, it is overwhelmingly Muslim. Under the decade-long rule of the country's Islamist rooted AK Party, Muslim-compliant businesses have flourished.

Thee government move into Islamic finance is a smart strategy, said Attila Yesilada, an Istanbul-based political analyst with Global Source Partners, a political consultancy firm.

"There were people and institutions who refused to take interest and these people kept their money in non-interest safe deposits," he said."They suffered huge losses just because they genuinely believed interest is sinful as defined by the Koran. So there is a lot of demand for Islamic banking products in Turkey --  both from...devout Islamic client base as well as from the Gulf kingdoms."

Islamic banks operate in compliance with Islamic financial rules which ban interest. But Islamic banking firms use Islamic-compliant financial instruments to generate income. In the past decade, that sector has rapidly grown into an estimated $1 trillion industry.

Most of that growth has happened in the energy rich Gulf states and North Africa. In Turkey, the growth has been less impressive, with only four institutions currently offering Islamic finance, though these banks have seen some growth.

Omer Bolat, the CEO of the conglomerate Albayrak and former head of the Islamic business confederation Musiad, said the government's decision to enter the Islamic finance market provides an important political guarantee given that previous Turkish governments, which were staunchly secular, viewed it with suspicion.

"Before this [present] government came to power, the outgoing governments were not sympathetic to Islamic banking sector and the government could shut them down with a decree or law easily," Bolat said. "And depositors feared if these banks were shut down [they] might have to lost their deposits."

Stronger Islamic banks would enable Turkey to attract more cash from the Gulf and Asia, where the appetite for Sharia-compliant products far outstrips the existing supply, according to observers.

This could potentially make Istanbul a regional financial hub, said Inan Demir, chief economist at Istanbul-based Finansbank.

"If the government and economic administration has ambitions of being a regional financial center, then that financial center will have to take in the Middle Eastern and North African regions as well, where Islamic practices dominate," Demir said.  "So in that sense, it could have some response with the Middle Eastern and North Africa markets."

For now, Europe still accounts for the lion's share of trade with Turkey's financial institutions and wider economy. But with Europe still in the grip of financial woes, the Turkish economy is diversifying and looking at alternative markets in the Middle East or North Africa. The development of Islamic finance could become an increasingly useful instrument in that strategy.

You May Like

Multimedia Anti-Keystone XL Protests Continue

Demonstrators are worried about pipeline's effect on climate change, their traditional way of life, health and safety More

Thailand's Political Power Struggle Continues

Court gave Prime Minister Yingluck Shinawatra until May 2 to prepare her defense over abuse of power charges but uncertainty remains over election timing More

Malaysia Plane Search Tests Limits of Ocean Mapping Technology

Expert tells VOA existing equipment’s maximum operating depth is around 6 kilometers as operation continues on ocean bed for any trace of MH370 More

This forum has been closed.
Comment Sorting
Comments
     
by: Domeniq from: France
May 22, 2013 7:04 AM
if NATO think that these revolting Turks are allies... its a sad mistake!!

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Pet Kangaroo Helps Spread Environmental Messagei
X
Penelope Poulou
April 22, 2014 5:53 PM
Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pet Kangaroo Helps Spread Environmental Message

Children’s author Julia Heckathorn travels the world to learn about different ecosystems and endangered animals. She pours her knowledge into children’s books, hoping the next generation will right the environmental wrongs of our times. As in many children's books, the main character in Heckathorn's stories is an animal. Unlike those other characters, though, this one is real - a kangaroo, that lives in the author’s backyard. VOA’s Penelope Poulou has more.
Video

Video Pro-Russian Separatists Plan 'Federalization Referendum' in Eastern Ukraine

Pro-Russian separatists in eastern Ukraine say they plan to move forward next month with a referendum vote for greater autonomy, despite the Geneva agreement reached with Russia, the U.S. and Ukraine to end the political conflict. VOA's Brian Padden reports from the city of Donetsk in Eastern Ukraine.
Video

Video Pope Francis Hopes Dual Canonizations Will Reconcile Church

On April 27, two popes - John the XXIII and John Paul II - will be made saints in a ceremony at St. Peter’s Square. VOA religion correspondent Jerome Socolovsky says the dual canonization is part of the current pope’s program to reconcile liberals and conservatives in the Roman Catholic Church.
Video

Video In Capturing Nature's Majesty, Film Makes Case for Its Survival

French filmmaker Luc Jacquet won worldwide acclaim for his 2005 Academy Award-winning documentary "March of the Penguins". Now Jacquet is back with a new film that takes movie-goers deep into the heart of a tropical rainforest - not only to celebrate its grandeur, but to make the case for its survival. VOA's Rosanne Skirble reports.
Video

Video Boston Marathon Bittersweet for Many Runners

Monday's running of the Boston Marathon was bittersweet for many of the 36,000 participants as they finished the run that was interrupted by a double bombing last year. Many gathered along the route paid respect to the four people killed as a result of two bombings near the finish line. VOA's Carolyn Presutti returned to Boston this year to follow two runners, forever changed because of the crimes.
Video

Video International Students Learn Film Production in World's Movie Capital

Hollywood - which is part of Los Angeles - is the movie capital of the world, and many aspiring filmmakers go there in hopes of breaking into the movie business. Mike O'Sullivan reports that regional universities are also a magnet for students who hope to become producers or directors.
Video

Video Pacific Rim Trade Deal Proves Elusive

With the U.S.-led war in Iraq ended and American military involvement in Afghanistan winding down, President Barack Obama has sought to pivot the country's foreign policy focus towards Asia. One aspect of that pivot is the negotiation of a free-trade agreement among 12 Pacific Rim nations. But as Obama leaves this week on a trip to four Asian countries he has found it very difficult to complete the trade pact. VOA's Ken Bredemeier has more from Washington.
Video

Video Autistic Adults Face Housing, Job Challenges

Many parents of children with disabilities fear for the future of their adult child. It can be difficult to find services to help adults with disabilities - physical, mental or emotional - find work or live on their own. The mother of an autistic boy set up a foundation to advocate for the estimated 1.2 million American adults with autism, a developmental disorder that causes communication difficulties and often social difficulties. VOA's Faiza Elmasry reports.
AppleAndroid