INTEREST- FREE BANKING: REASONS FOR CHOOSING ISLAMIC BANKING IN BINGOL CITY

Abstract

Participation banking (Interest Free Banking)/Islamic Banking (IB) is a current topic in Turkey and in many Muslim countries. In Hammurabi’s law  and Babil’s documents in 1955-1913  BC, interest and usury were forbidden to protect the community. Participation banking is explained in this study and compared with interest orienting conventional banking system.  A questionnaire method was used as a data collection tool in Bingöl city in East of Turkey in 2015. 500 customers of Turkey Finance Bank in Bingöl were surveyed and obtained data was analyzed through IBM SPSS 20 Software. Frequency-analysis method, descriptive statistics and ANOVA methods were used to analyze collected data. According to these findings, it can be said that participating banking is usually preferred among 20-40 age group. Also, it is stated that participants use participating banking less than 6 years. The reason why they select participation banking is as; close relationship with branch personnel, leading religious sensibility, friendly and helpful personnel, image and popularity of banking, Islamic Audit Commission of bank. As the age of participants increase, they have more positive thoughts on participation banking. Moreover, there is a high suspiciousness that IB is applied as conventional banking, making it also Haram.  

Keywords

• Interest-free banking,Islamic Banking,Participation Banking

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