International Conference on Economic and Social Studies, 10-11 May, 2013, International Burch University, Sarajevo

Conclusions

Participation banks, with their old name Special Finance Houses, are institutions collecting funds similar to deposit through private current accounts and accounts giving right to profit/loss participation, and utilizing funds through methods such as production support, partnership of profit and loss, leasing, document against payment. In Turkey, the foundation of these institutions has been allowed since 1984. Their number which has increased to 6 decreased to 4 eventually parallel to the consolidation of deposit banks. However growth of volume and branch number in the finance sector especially in the last years is also extremely valid for these institutions. Their share is small today in total sector but it grows in a stable manner with their higher growth rate than other banks. In 2001, participation banks had total asset amount of 2, 4 billion TL which meant a share of 1, 08 % in the total assets of the sector. These amounts and shares were 7, 3 billion TL and 2, 34 % in 2004, 13.730 billion TL and 2, 83 % in 2006, 25.769 billion TL and % 3, 64 in 2008, and 56.148 billion TL and 5, 3 % as of the end of 2012.

• 
  These companies which are subject to most limitations of general arrangements and loan limitations in the Banking Act no. 5411 differ from deposit banks at most in terms of that they don’t undertake the risk of interest. Because these kinds of banks don’t undertake the risk of interest which is one of the greatest risks which have to be managed in banking sector, we can talk about an asset-liability balance which is less sensitive to financial crisis. However not to undertake the risk of interest, in these kinds of banks, differently from deposit banks, eliminates the opportunity to obtain sudden and high institutional profit based on interest rate difference.
  
• 
  Putting three public banks and one SIDF bank aside, while 28 private deposit banks have 254 branches on an average, each of 4 participation banks has 207 branches on an average. However in terms of the increase rate of branches from 2007 to 2012, it is seen that participation banks reached almost three times bigger increase rate of branch numbers than deposit banks.
  
• 
  Increase rate of loan-fund utilization from the end of 2007 to the end of 2012 of participation banks higher than deposit bank’s rate. They are 226% and 166 % respectively.
  
• 
  Total net profits increasing rate of participant is %74 from the end of 2007 to the end of 2012. Looking at deposit banks for the 2007-2012 period, their profit increased by %71 from 2007 to 2012, and reached to 18,2 billion TL in 2011. The rate of participation banks is a little higher than deposit banks. In terms of average profit per bank, deposit banks have too high figures compared to participation banks naturally. However it is also obvious that average scales, branch numbers and history of deposit banks are above participation banks
  
• 
  It is seen that participation banks increased their equity in 2012 212% according to the 2007. Looking at deposit banks for the 2007-2012 periods, their equity capital increased by 129 % from 2007 to 2012. The difference between them is important.
  
• 
  Thus those given results also all support our thesis in this paper.
  
• 
  Meanwhile, the participation banks also have some problems for instance they have needed such as the Interbank systems which provide urgent proper credits for the depository banks in the short run. Whereas, this situation negatively hinders the participation banks performance. Because they are sharing nearly all of their funds for the creditors or investors who uses them for leasing, production, sales, trade, export and imports which composed the real sector of the economy.
  
• 
  For that reason it is very vital interest for the participation banks forming the similar interbank system which would increases their customers and operational transactions, too. For instance, the establishment of guaranty insurance system among the participation banks positively influenced their expansion in the market.
  
• 
  Nevertheless, the depository banks they are the corporations so their rulers and executive bodies are responsible fully form their operations and in any case, the state quarantined their possible bankruptcy situations, but in the Participation Banking systems there was no such kind of full responsibility or insurance system in their financial credit operations because of joint losses or gains. In both theory and practice there is a legal gap that is why it leaded to some corruptions and abuses, the participation banks and companies in Turkey and European countries, too. This problem has been partially solved for Turkey. Those banks and companies forced to adopt the status and the legal structural establishment of banks and companies. Some of them applied to be part of the Capital Stock Exchange Market. That is why they could be checked and controlled by the state audit system.
  
• 
  This study examines the case of each participation bank among each other. The tables and figures show the each participation bank ordering at 9 different criteria. In conclusion, Bank Asya is the leader among the four banks in the eight criteria, Türkiye Finans is the first profitable bank.
  
• 
  This study examines the more important thing for these banks. The average increasing rate for last five years has been calculated in this study. This figures show that Kuveyt Türk Participation Bank has the highest average in the almost all of criteria.
  
• 
  This study shows that The Participation banks have increased the theirs shares in the sector also. While the share of Participation banks is %3,3 in 2007, the share reaches to %5,3 in the end of 2012. The increasing rate of sector share is %61 as a number.
  

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*.**Published in Official Journal no. 26333. Banking Regulation and Supervision Agency (BRSA) / Bankacılık Düzenleme ve Denetleme Kurumu (BDDK), article 7, 2006

*^* This Figure Strong Estimate. Calculated via increase rate of 9/2011 and 9/2012 on 12/2011 figures. (Exact figures will publish in the middle of May by BAT)

**^** Very Strong Estimate. Deposit Banks 2012 Exact Figures will Publish in the Middle of May by BAT. This Figure Calculated via increase rate of 9/2011 and 9/2012 on 12/2011 figures.

*^* This Figure Strong Estimate. Calculated via increase rate of 9/2011 and 9/2012 on 12/2011 figures. (Exact figures will publish in the middle of May by BAT)

*^* This Figure Strong Estimate. Calculated via increase rate of 9/2011 and 9/2012 on 12/2011 figures. (Exact figures will publish in the middle of May by BAT)

*^* This Figure Strong Estimate. Calculated via increase rate of 9/2011 and 9/2012 on 12/2011 figures. (Exact figures will publish in the middle of May by BAT)

** Very Strong Estimate. Deposit Banks Exact Figures will Publish in the Middle of May.