Minister praises Islamic model of banking as crisis repellent

ISTANBUL- Hürriyet Daily News

Finance Minister Mehmet Şimşek (R) receives a gift from Adem Esen, rector of Istanbul’s Sabahattin Zaim University, during an event on Islamic banking and economics over the weekend. ‘Participation banking is still developing and there remains a lot to be done,’ says Şimşek. ‘Over 60 countries in the world are turning to participation banking.’ AA photo

The ongoing global economic crisis would not have stung as much if the global financial system had been based on participation banking, a form of Islamic banking, according to Finance Minister Mehmet Şimsek.

“Participation banking is still developing and there remains a lot to be done. Over 60 countries in the world are turning to participation banking,” said Şimşek during an Istanbul event, adding that “it is a much more sound and reliable banking system.”

The “Islamic Economy” conference hosted by the Istanbul Association of Economists (İKDER), Participation Banks Association of Turkey (TKBB) and Istanbul Sabahattin Zaim University was held in Istanbul Dec. 10, bringing together international academics, bankers and businessmen.

‘Not a rival to regular banks’
Turkey was affected by the global economic crisis and its economy had been shrunk, Şimşek said during his speech. “But Turkey recovered thanks to very important reforms which had been implemented especially during Justice & Development Party (AKP) rule after 2002.”

Banking Regulation and Supervision (BDDK) Vice President İhsan Uğur Delikanlı, who also spoke at the conference, said the interest free banking sector model practiced by the participation banks had seen enormous leaps over the past 26 years.

“Our mission is not to compete with regular banks, but to approach the banking system from a different point of view. Our goal is to complete the system and renew it by bringing depth and variety,” said TKBB Secretary General Osman Akyüz.

Participation banking is an Islamic model of banking which prohibits the charging or paying of interest. Sabahattin Zaim University is a front runner in exploring interest free banking in academic circles. The university was named after the late Turkish Islamic economist and academic Sabahattin Zaim.
Professor Hayrettin Karaman was awarded presented Sabahattin Zaim Islam and Economy award at the end of the ceremony.