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There is not a comprehensive study which covers the evolution of the Turkish Islamic liquidity management landscape so far. The purpose of this study is to show how Turkish PBs have been gradually furnished with the needed liquidity management instruments by the Turkish Treasury, Central Bank of the Republic of Turkey and other related regulatory bodies and to analyze the repercussions of the evolution of Islamic liquidity management on balance sheets of participation banks (PBs) over time. This study also aims to come up with some humble policy recommendations that can improve Islamic liquidity management set up going forward.

The study acknowledges that at least two important elements of liquidity management should be in place on the way of improving the Islamic liquidity management environment. The first one is asset side liquidity or having an adequate amount of high-quality liquid assets. The second one is liability side liquidity, meaning that having access to funding liquidity, especially to central bank liquidity. Historical development of liquidity-related asset-side and liability-side balance sheet items between 2010 and 2020 are analyzed and visualized to demonstrate the progress in the Islamic liquidity management landscape in Turkey.

From 2010 to 2020, Turkish financial authorities made a great effort to get PBs to have more proper liquidity management tools. Turkish authorities have leveled the playing field for PBs via enriching liquidity management tools. Government sukuk issuances has filled the liquid asset gap, improved the liquidity profile of PBs and lessened overall liquidity risk while introduced central bank liquidity facilitates have reduced funding liquidity risk. Islamic liquidity management setup is much more advanced and participation banking system is more resilient than the past, but there are still some missing steps that can further ameliorate the Islamic liquidity management ecosystem in Turkey.

This study is a visualized ratio analysis of PB’s improving liquidity profile in the past 10 years and fills an important gap in terms of displaying the overall Islamic liquidity management landscape in Turkey. Further studies and analysis can be built on this paper on Islamic liquidity management, banking and finance in the future. This paper can be a useful basement for researchers who intend to study on potential impacts of improving the liquidity of PBs on monetary transmission, banking profitability and overall banking system systemic risks.

Three different and interconnected areas should be further improved. These are enriching the diversity of government securities, providing central bank liquidity facilities under various available Islamic contracts and establishing an organized Islamic money market which will facilitate fund flows among various Islamic Financial Institutions (IFIs) and conventional financial institutions. Policymakers should act together, handle arising issues in a holistic manner, design and operationalize these incomplete parts of the puzzle to further optimize the playing field for the IFIs. Thus, there will be a more inclusive and competitive finance industry in which all risks are better managed and resources are more efficiently allocated.

Although various other studies are available on the Turkish Islamic banking industry, there is not such a specific study on Islamic liquidity management of Turkish PBs which makes this study a preliminary and different one. Apart from shedding light on the Turkish journey that has built a sound Islamic liquidity management infrastructure in the past 10 year, this study also shows an exemplary country experience in developing a more inclusive and robust financial ecosystem. This paper also contributes to financial development and inclusion literature as a policy paper.

This study aims to empirically investigate the connection between Islamic finance and economic growth in Turkey using the endogenous growth model.

It applies quantile regression with the Markov chain marginal bootstrap resampling technique by adopting total Islamic financing as the main exogenous explanatory factor in the endogenous growth model, while the gross domestic product (GDP) is employed as a measure of economic growth. The sample consists of all full-fledged participation (Islamic) banks operating in Turkey spanning from 2013Q4 until 2019Q4. The study uses academic literature, official financial reports from the Participation Banks Association of Turkey, REDmoney Group, Islamic Financial Services Board (IFSB) and the International Monetary Fund (IMF) database.

The results show that Islamic finance is promoting economic growth in Turkey, which mirrors the success of the New Turkish Economy Program (2019–2021) which aims at boosting economic growth by enhancing the Islamic finance share in the Turkish banking sector and the global market.

Turkey has a dual banking system (conventional and participation (Islamic)) and both can influence the country's real economy. This study is limited to the influence of Islamic banking on Turkish economic growth. The study also restricts its size and coverage from 2013Q4 to 2019Q4, to cover the years over which data for all variables included in the research are available.

This paper suggests the adoption of the Turkish successful experiment as a path to reach economic growth by increasing the Islamic finance share in the banking industry for countries that seek to promote economic growth by Islamic finance, as the findings of this paper support.

This study is the first that examines the influence of Islamic finance on economic growth under a new theoretical framework of the endogenous growth model in Turkey using a robust non-parametric approach.

The purpose of this paper is to attempt to compare the performance of Islamic banks against conventional banks in Turkey. This comparison is much more distinctive and significant in Turkey when compared to other countries, as Turkey stands as a model for the world in interest-free banking system.

The comparative performance analysis was conducted by means of logistic regression method during the period of 2001-2009. The CAMELS approach is utilized to assess the managerial and financial performance of banks.

The results signify that Islamic banks operating in Turkey perform better in profitability and asset management ratios compared to conventional banks but lag in sensitivity to market risk criterion. These findings might mainly be ascribed to the fact that these banks allow lower provisional losses compared to conventional banks and have some tax advantages.

Utilizing a more recent and consistent data set, the analyses could be replicated to determine if the results are subject to any sample bias.

These finding reveal significant implications for potential entrants into Turkish banking sector particularly for foreign investors.

The findings from this study may reinforce the awareness and confidence in participating banks in Turkey.

Turkey is particularly interesting to conduct this analysis because Turkey is a Muslim but secular country and both Islamic and conventional banks are subject to same set of banking regulations which are based on Western traditional banking system. Furthermore, to the knowledge, there is not a comprehensive study that compares the performance of conventional and Islamic banks in a Western banking system.

This paper aims to evaluate the root causes of stagnation of the Islamic banking sector in Turkey in three steps and proposes solutions and policy recommendations.

First, global Islamic banking practices in terms of governance and instruments are summarised and compared with the Turkish experience. Second, the financial and efficiency ratios of Turkish Islamic banks (IBs) and conventional banks (CBs) are compared and analysed for the period 2005 to 2015. Finally, the long-term growth strategy of Turkish IBs is evaluated.

This paper asserts that Islamic banking in Turkey diverges from Islamic banking practices of prominent countries by not having a Sharīʿah governance framework at either a national or bank level. Turkey is thus immediately in need of a sound Sharīʿah governance framework. Increasing the variety of instruments and improving the perception of Islamic banking in the society are other critical points. Furthermore, regulatory and research institutions specifically focusing on Islamic banking are insufficient. A large number of financial and efficiency ratios reveal that the efficiency and profitability of IBs fall behind that of CBs. IBs should improve their business models, operational efficiencies and information technology infrastructure as these issues are undervalued in their growth strategy.

This study sheds light on the Turkish Islamic banking sector, which is a rarely studied topic. It is the first study that provides institutional differences of banking practices and evaluates the efficiency status and growth strategy of IBs in Turkey.

This study examines the legal codification of nascent markets, specifically, the process of defining and incorporating Islamic banking and organic agriculture within the legal system in Turkey. I find that actors’ priorities differ significantly with respect to formal codification and that the existing legal order and socio-political and economic contexts shape how state and non-state actors influence legislative and regulative action. This study contributes to our understanding of how actors and their ideological commitments and relational concerns affect the legal formulation of new industries.

This study aims to test whether the Islamic bank rate of returns are affected by the deposit rates of the interest-based bank in Turkey and whether they need to develop additional tools to manage it if they face an interest risk.

This study tests the causality between the Islamic bank rate of returns and the time deposit interest rates between 2002 and 2010 in Turkey by use of the Granger Causality method based on monthly data. The same analysis is repeated with respect to the terms before and after 2006.

It is concluded that for each term, the time deposit interest rates are the Granger cause of the Islamic bank rate of returns. This causality relation is more visible for the period after 2006.

The results shows that the Islamic banks are sensitive to the interest-based bank interest rates in Turkey. Therefore, this finding suggests that these banks need to remain cautious vis-à-vis the interest rate risk.

The purpose of this paper is to highlight the effects of liquidity regulations on Islamic banking using Turkey as a case study. It recommends an alternative mechanism using capital market standards for liquidity requirement of Islamic banks to mitigate certain risks.

The paper evaluates the correlation between cash and profit and between liquidity coverage ratio and capital adequacy ratio of participating banks in Turkey.

Islamic banks hold higher cash than they should. The paper suggests a maximum liquidity ratio for Islamic banks. Applying a cap to the liquidity coverage ratio will impose discipline on Islamic banks to manage their assets appropriately as well as to encourage their financial intermediation to the real sector. In addition, the authors argue that even if the cash outflows from investment account on the right side of Islamic banks’ balance sheets are included in the short-term projection, they should not be included in the denominator of the liquidity coverage ratio.

The current Basel requirements and Islamic Financial Services Board standards are disincentives to Islamic banks to provide risk-sharing or partnership-based investments and services to their customers and depositors. Effective legal and regulatory framework and supervisory oversight need to take into account the difference between the risk profile of a typical Islamic bank and a conventional bank.

Although it is well accepted that without adequate regulatory involvement it would not be possible to control and mitigate the risks related to Islamic banking financial intermediation, there should be a balance between the growth and stability of the industry. The regulatory involvement that satisfies this balance would be welcome.

The purpose of this paper is twofold: first, this study analyzes the extent to which banks report online their corporate social responsibility (CSR) practices; second, it determines the impact of size, ownership structure, multiple exchange listing, and the internationalization of banks on the level of their online CSR reporting.

This study examines the Turkish banking industry’s online CSR communications by performing a content analysis of banks’ online reporting of their CSR practices in four sub-dimensions, namely, environment and energy, human resources, products and customers, and community involvement. A sample of 25 banks in Turkey was grouped according to the criteria of size, ownership structure (listed or unlisted on stock exchanges), multiple exchange listing (listing on home and foreign exchanges), and internationality (local or foreign). This study employs a nonparametric Kruskal-Wallis test to determine the significance of the differences among these groups.

The results of the study demonstrate that the most disclosed dimension on the websites of the banks is products and customers. In particular, there is a lack of disclosure on items of environment and energy. Further, the findings of the research show that size, ownership structure, and multiple exchange listing are significant in explaining online CSR disclosure level.

Several previous studies have focussed less on the CSR disclosure practices of companies in industries with little direct environmental impact, such as banking and finance. This study extends the previous studies of CSR reporting by gathering data from the banks’ websites rather than their annual reports. This study contributes to the literature by examining the online CSR disclosure practices of banks from an emerging market context and, specifically, that of Turkey.

The purpose of this paper is to analyse the factors responsible for the rise and growth of smaller Islamic banks in the last decade.

Z‐score analysis is used to test the stability of both smaller and larger Islamic banks. The pooled ordinary least square (OLS) regression technique is also employed to examine the factors.

The results of this paper show higher z‐scores for smaller Islamic banks indicating that the latter have tended to be more stable than larger Islamic banks over the last decade. Z‐scores tend to increase with bank size for large Islamic banks, but decrease with size for the small Islamic banks. The OLS regression results confirm that larger banks have greater income diversity than do the smaller banks.

Islamic banking represents a radical departure from conventional banking, and from the viewpoint of corporate governance; it embodies a number of interesting features since equity participation, risk and profit‐and‐loss sharing arrangements form the basis of Islamic financing. Using econometric techniques, this paper provides valuable insights as to the stability of Islamic banks and the factors responsible for the growth of smaller such institutions that has been witnessed in the last decade.

The purpose of this paper is to analyze the association between banks’ advertising expenses and accounting measures of income and profitability for banking sector.

In this study the authors have used distributed lag models to investigate the association between advertising expenses and banks’ financial performance. To investigate the long-term effect of advertising expenses on financial performance of banking sector Koyck’s distributed lag models have been used.

The results confirm a significant and positive association between advertising expenses and financial performance. Besides its positive effect, the authors provide a basis for detecting the extent to which advertising has long-term benefits. The results show a positive association between advertising expenses and financial performance that extend that extends over time, thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately.

Although there are lots of studies about advertising and its effect on financial position of firms, research about advertising effects on financial performance of banking sector is very scarce. Therefore, this study has a potential to shed light on research about marketing aspect of financial sector. Besides, empirical results show a positive association between advertising expenses and financial performance that extend that extends over time (interest income, total operating income and return on assets), thereby suggesting that advertising expenses should be capitalized and then amortized instead of being incurred as an expense immediately. To sum it all, the paper finds an evidence for banking sector that advertising inholds “future economic benefits” which is the key criterion necessary for asset recognition.