Much extolled as the driving engine of a fast economic rebound in past years, Turkey's construction sector received the highest share of loans extended by participation banks in the country last year, the latest data indicate. (source)
According to figures provided by Association of Turkish Participation Banks (TKBB) President Fahrettin Yahşi on Tuesday in İstanbul, the amount of money Turkey's fast-growing participation banks lent construction firms in loans was $8.01 billion in the period between January and November of last year. The sector with the second highest loan share from participation banks was trade and retail with $3.52 billion in January-November 2011, while textile came in third with $2.05 billion and food fourth with $1.35 billion. With regard to consumer loans, the amount extended by participation banks in Turkey was $3.46 billion in the first 11 months of last year. Yahşi said $2.03 billion of this went to housing loans, one of the most dynamic loan channels in Turkey last year.
Yahşi underlined that participation banks provided as much support as they could to the non-financial sector in Turkey. “Our support becomes relatively more apparent in times of global fluctuations. … We do not place extra burdens on firms due to economic problems.” The TKBB head said participation banks increased the amount of loans by 19 percent in the first 11 months of last year over the same period of 2010 to $20.58 billion. He underlined that participation banks continued to increase their popularity in Turkey as more companies feel comfortable working with these banks than in the past.
Observers argue a 2009 global financial crisis, which has shaken almost all economies around the world, has helped Islamic participation banking gain more prestige worldwide. These Islamic finance institutions have also grown considerably over the years in Turkey since they met some of the largest conservative conglomerates' preferences of not paying or being paid interest on loans and of not becoming involved in any kind of investment in companies that sell goods or services considered haram (forbidden) in Islamic teachings.
Turkish participation banks also operate under the Turkish Banking Law and are regulated and supervised by the Banking Regulation and Supervision Agency (BDDK). They have grown tenfold on average over the last eight years as their assets have risen from TL 3.9 billion to TL 43.3 between 2003 and 2011.
