Turkey needs holistic approach for Islamic finance

And it should shape financial instruments with a holistic approach under Islamic finance principles for the full development of Islamic finance for Turkey.

Ankara’s moves to become a leading actor in global Islamic finance are admirable, said Hamdi Donduren, the head of the Islamic Economics and Finance Department at Konya Karatay University.

Islamic finance should not be treated as Islamic banking and the financial sector should also cover insurance, treasury operations and accounting and regulatory transactions, he said.

"Even banks are interest-free. We would not have done business in accordance with Islamic finance if you cannot perform all your financial transactions within the framework of Islamic finance instruments.

"For this, we need fintech applications used in financial circles, Islamic insurance companies, Islamic investment funds and Islamic sensitive capital market intermediary institutions," he said.

Touching on the academic side in Turkey, he stressed that it is hopeful that academics in Turkey want to focus on the Islamic finance field.

"The Islamic finance sector is a newly developing sector in the world and Turkey has carried out studies simultaneously with the world,” he said.

With the participation of state lenders in this field, confidence in Turkey has been boosted related to Islamic finance, he said. "Our country will become one of the leading countries in this field both in sectoral and academic terms in the coming years."

Global demand

The Islamic finance industry, which dates to the 1960s, has achieved significant successes and has caught a serious growth trend today, said Donduren.

In this process, the work of governments, especially in Malaysia, Indonesia, Egypt, Iran and Gulf countries, and international organizations such as the Organization of Islamic Cooperation and the Islamic Development Bank, have made significant contributions to the development of Islamic finance, he noted.

Particularly in the last 15 - 20 years, Turkey made serious progress in terms of institutional and legal regulations, he said.

Countries that advance in financial services, such as the UK and Luxembourg, have shown interest in Islamic finance for many years, according to Donduren, and the US also has a high level of interest in Islamic finance products, especially through large investment funds in capital markets.

International conference

Mentioning the First Karatay International Conference on Islamic Economics and Finance (KARCIEF), organized by his school in May with international participation, he said the chairmen of commerce chambers, officials and academics addressed the seminar.

The two-day event discussed six topics, including Islamic finance, Islamic capital markets, financial technologies, and SMEs.

The school also plans to make it an annual event, he added.

Saying that the university accepted the first Islamic economy and finance students in 2016, he stressed there are only two universities in Turkey active in the field.

There is good interest among students in Turkey and he noted the country's education institutions started studies for Islamic economy and finance.

"Institutes, research centers and postgraduate programs were established in many universities. Also this year, for the first time, a state university obtained establishment permission for the undergraduate department of Islamic economy and finance," he said.

All of this may make Turkey a leading country in this area, he said.