Exploring the Demand Conditions for Islamic Banking/Participation Banks in Turkey: A Longitudinal Analysis through Political Economy Perspectives

Since their inception in the mid-1980s, Islamic banks (IBs) or participation banks (PBs) have not yet become one of the primary aspects of the Turkish financial system. Given the developments in other regions such as South East Asia and the Gulf, the market share of the IB sector has been minute, only attaining the level of five percent in the Turkish financial system. In this sluggish development, the political dynamics of Turkey, combined with the external and internal dynamics of IB working environment, can be considered as an important factor alongside the internal dynamics of the sector. This research therefore intends to examine the development of interest-free banking, considering the internal dynamics of the sector as well as adopting a political economy approach to bestow further meaning to the sources of the observed trajectories. In addition, this study aims to explore these developments by using two data sets from two different periods in a longitudinal manner, so as to giv