Turkey’s failed coup creates an unlikely winner: Islamic banking

As the Turkish people pick up the pieces following the attempted military takeover of their government on June 15, speculation about the country’s economic future is rampant. From a slump in capital and credit markets to a downgrade in the country’s sovereign credit rating, many pundits are bearish about the long-term prospects for the republic. At least one sector, however, is standing strong after the coup attempt: Islamic banking. As a dual financial system that practices both conventional and Islamic finance, Turkey was introduced to Islamic lenders (or “participation banks,” as they’re known there) at the end of 1980s, and the sector grew rapidly by the beginning of the 2000s. In 2005, the Islamist-oriented government officially recognized them and offered state guarantees on deposits, attracting interest from religious depositors and nearly doubling the industry’s market share by 2013. Growth over the last few years has also been compelling. The Participation Banks Association of Turkey reveals that total assets in five Turkish Islamic lenders grew to 120.3 billion Turkish lira ($33.6 billion) in 2015, an increase of more than 15% from the previous year. And there is more room for expansion, considering the size of Islamic lenders as compared to the