Publication Date
2015
Document Type
Paper
Keywords
Turkish Financial Markets, Sharia, Islamic banks
Abstract
The financial markets in Turkey provide a laboratory to help resolve these competing views. Islamic law or Sharia contains a number of proscriptions that directly affect financial practices. The payment and receipt of interest is prohibited; so are most kinds of commercial insurance. These interpretations provided the impetus in the Islamic world for the creation of a class of banks that sought to offer Sharia compliant services.
The first Islamic Banks in Turkey began operations in the 1980s. Their entry was initially tepid, in no small part because of secularist principles. Islamic financial institutions could not overtly advertise their religious orientation. The country had no “Islamic” banks, only finance houses. They were not Sharia compliant but “interest-free.” Moreover, the government left them in an uncertain regulatory status and subjected them to restrictions on growth. In this environment, the Islamic banks remained a peripheral part of the financial system.
With the election of the AKP in 2002, however, the environment for Islamic banks in Turkey changed. Limitations on branch networks and capital raising were lifted. The government removed restrictions on the issuance of Sharia compliant bonds. Officials from the Islamic banks were appointed to the highest levels of government.
This Article does several things. First, it examines principles of Islam that affect banking practices, with a particular emphasis on deposit insurance and credit cards. Second, the Article discusses the emergence of secularism in Turkey and the introduction of Islamic banks into the Turkish financial markets. The Article then examine their evolution, with particular emphasis on the changes implemented by the AKP. Finally, the Article examines the impact of these reforms, and what that impact says about Islamic influence in Turkey.
Copyright Statement / License for Reuse
This work is licensed under a Creative Commons Attribution 4.0 International License.
Publication Statement
Copyright held by the author. User is responsible for all copyright compliance.
Rights Holder
J. Robert Brown Jr.
Provenance
Received from author
File Format
application/pdf
Language
English (eng)
Extent
57 pgs
File Size
500 KB
Publication Title
DU Sturm College of Law
First Page
407
Last Page
463
Recommended Citation
Brooklyn Journal of International Law, Vol. 40, No. 2, 2015