Turkey Poised to Become the Capital of Islamic Finance

In light of the big developments in the Turkish economy and the enormous facilities offered by the Turkish government for the banks and the financial sector in general, many analyses and economic studies are daily prepared, assuring that Turkey now is a country capable of managing the Islamic finance globally, and to be the capital of this type of economy.

There are five Islamic banks acquiring the Islamic finance sector in Turkey, and they are: Kuwait Turk Bank, Albaraka Turk Bank, Finance Bank, and the two governmental banks; Ziraat Bank and Vakif Bank.

The Secretary-General of the International Union for Muslim Scholars, Dr. Ali Al Qaradaghi, an expert in Islamic banks, said that Turkey is the suitable environment for Islamic banks in the world, supporting his vision basing on the financing means in Turkey, in addition to the superiority in the trade, industry, tourism sectors that recorded high growth rates.

In Turkey, 52 banks work, divided in type into: 3 government-owned banks, 10 private banks, 21 foreign banks, 13 investment banks, and 5 Islamic banks.

Al Qaradaghi stressed that the Islamic banks have proved, during the past 40 years, its ability to develop, thrive, and to be far away from crises that hit the capitalist economy.

The reasons for preferring Turkey rather than other countries

For his part, Dr. Shehab Al Azazi, an expert in Islamic finance and the President of the Global Center for Islamic Economy in Britain, noted that "Turkey is poised to be the capital of Islamic finance, since it is better than the other states in providing the infrastructure for this kind of economy."

He added in an interview to the Anadolu Agency that "Turkey has an integrating Islamic system such as Islamic finance and solidarity, endowments (awqaf), zakat, charity work, tourism, and halal products."

Moreover, he cleared that "if Turkey adopted Islamic banking, demand for it will be great definitely, not only from Islamic banks, but also from all sectors in the Arab and Islamic countries."

The economic expert also emphasized on the need to modify some laws in Turkey "to make it more flexible and clearer to support the development of the Islamic economics, and to provide a separate section in the Turkish Central Bank with autonomy in implementing the supervision of Islamic banks."

Islamic banks' profit in Turkey last year

According to the Islamic Banks Union in Turkey, the total assets of Islamic banks is about 5.10% of the proportion of all the banks in the country during the first eight months of this year, while it was 4.5% last year.

Also according to the Islamic Banks Union, The profit of the Islamic banks in Turkey during the first eight months of this year is 759 million Turkish liras (246 million US dollars).

So, the assets of the Islamic banks in Turkey increased by 15.3% last year, in 2015, to reach 120 billion Turkish liras (39.036 billion dollars).

An overview of the most prominent Islamic banks in Turkey

"Albaraka Türk" Bank is (one of the branches of the main bank in Bahrain), and consider the oldest Islamic Bank in Turkey; it was opened in 1984 in partnership between Bahrain and Turkey. This bank provides all banking services to the dealers according to the Islamic Sharia in all its branches covering 23 Turkish states.

"Kuveyt Türk" Bank (the third Islamic bank) in Turkey; it was founded in 1989 as one of the branches of "the National Bank of Kuwait (NBK)"; and the bank is considered as the largest Islamic bank in terms of balance of funding. It is based on partnership between Turkey and Kuwait, and it has 290 branches in various Turkish States.