Islamic Finance as a Means to Make Istanbul an International Financial Centre

This paper discusses and assesses Istanbul as an international finance centre within the context of its position in the sector of Islamic finance. No doubt, Istanbul is a centre of business and culture of Turkey and the Turkish government is at present endeavouring to turn Istanbul into a regional finance centre in ten years and ,furthermore, into one of the top international financial centre in thirty years. In this context we evaluate Istanbul’s potential and position to assume the role of a hub for Islamic finance. Our main conclusions are as follows; the current image, legal and regulatory infrastructure and human capacity of Istanbul do not presently allow it to become an international finance centre. In contrast, if we consider its strategic location standing between the Middle East, Eurasia and Africa as well as its strong relations with Muslim countries, and ,last but not least, its strong banking system, Istanbul has the potential to serve as a centre for Islamic finance provided that the government’s ambitions remain focused in this direction.

The Determinants of Net Interest Margin in the Turkish Banking Sector: Does Bank Ownership Matter?

This research presented an empirical investigation of the determinants of the net interest margin in Turkish Banking sector with a particular emphasis on the bank ownership structure. This study employed a unique bank-level dataset covering Turkey’s commercial banking sector for the 2001-2012. Our main results are as follows. Operation diversity, credit risk and operating costs are important determinants of margin in Turkey. More efficient banks exhibit lower margin and also price stability contributes to lower margin. The effect of principal determinants such as credit risk, bank size, market concentration and inflation vary across foreign-owned, state-controlled and private banks. At the same time, the impacts of implicit interest payment, operation diversity and operating cost are homogeneous across all banks.