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Abstract


THE COMPARISON OF TRADITIONAL AND PARTICIPATION BANKS WITH SELECTED INDICATORS: 2006-2018 PERIOD

The banking sector, which is the basis of the financial system, is an important part of the rapid economic growth and development in terms of enabling the surpluses to turn into productive investments. The main function of banks in an economy is to ensure that savings are transformed into investments. The banking sector collects fund surpluses of savings holders and transfers to fund investors. However, different types of organized banks use different methods in performing this function. While deposit banks, also called traditional banking, collect savings funds and convert them into loans, participation banks separate from traditional banks both in fund collection and fund allocation. Participation banks collect funds on a profit and / or loss sharing basis and foresee risk sharing. Participation banks, which have been very popular in recent years, have been established with the aim of collecting funds by interest-free methods and lending these funds to those in need of interest by interest-free methods. In this respect, participation banks play an important role in attracting funds that are not transferred to the economy due to the sensitivity of some sectors to interest rates. This study aims to compare the performance of traditional banks and participation banks with various indicators for the period 2006-2018. For this purpose in this study, the definition, importance and development of participation banking are explained. Also the performances of traditional banks and participation banks were compared and interpreted with the help of selected indicators



Keywords
Traditional Banking, Participation Banking, Banking Sector.



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