Turkey's Islamic banking sector can expand further if it gets more capital

According to Standard & Poor's' article "Turkey's Growing Islamic Banking Sector Needs Fresh Capital For An Added Push," participation banks in Turkey look set to keep increasing their market shares over the medium term. However, S&P believes sluggish domestic savings and intensifying competition from conventional banks will likely limit the sector's progress without fresh capital and funding. The local authorities' more supportive stance toward the sector contributed significantly to the growth of Islamic banks. However, participation banks' rapid growth and high exposure to the construction sector render their asset quality vulnerable to an economic slowdown. The growth momentum existing participation banks have enjoyed can continue only if their capital bases increase and they achieve some competitive advantage.