Comparative Analysis of ProŞ t Shares and Interest Rates

Abstract

Within this study, profit shares and interest rates that were paid for various terms in Turkish Liras (TL), American Dollar (USD) and European Currency (Euro) by traditional and participation banks in Turkey, between January 2002 and May 2015 are comparatively analyzed. In order to fi nd out differences between mentioned banks, t-test is used for empirical analyses. As a result of these analyses it is found that profit share means in TL which traditional banks paid to their depositors are higher than the interest rates that are paid by participation banks. It is observed that so called difference is statistically significant. However; it is determined that participation banks distributes higher profit shares to the participation accounts in USD and Euro than deposit accounts’ interest rates but no statistically significant difference was observed.

Keywords

• Interest Free Banking, Participation Banking, Profit Shares, Deposit Interest Rates, Behavioral Finance.

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