The Turkish Financial System and Islamic Banking.

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Though only accounting for 5% of the $559 billion Turkish banking system, Islamic banking has been gaining ground of late in mostly secular Turkey because of the rapid growth of Anatolia province and the presence there of entrenched Islamic tradition. According to the tenets of Islam, interests rates cannot be charged on money deposited or loaned, thus making it difficult for devoted Muslims to be compliant with Shariah law while also holding a modern bank account. Turkey’s governing Justice and Development Party has encouraged the growth of Islamic banks by granting them a tax neutral status within Turkey. Because Islamic banks do not charge interest, they make money off of sharing profit and loss with their debtors. With fears of a global economic slowdown and its potential impact on Turkey and Islamic banking, concerns about Islamic banking’s market viability are worthy of consideration given the myriad of other investment options available.

 

 

[The Atlantic]