IslamicFinance.de

As part of an initiative backed by the Islamist government, state-run Ziraat Bank is working to set up a Shari’ah-compliant entity. Turkey already has four Islamic banks, known locally as participation banks, of which three are foreign-owned. But Shari’ah-compliant assets account for just 5 percent of total banking assets, far below the average of 25 per cent in the Gulf región. Size is mostly the problem. Islamic banks in Turkey are also lagging in innovation compared to peers elsewhere in the Muslim world. Stronger and larger Islamic banks could strengthen Turkey's financial position. Domestically, they could lure funds that could help fund Turkey's GDP growth. Internationally, stronger Islamic banks would enable Turkey to attract more cash from the Gulf and Asia.