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Abstract
Over the past decade, Islamic Financial Institutions substantially increased their market share in Turkey, and demonstrated an impressive growth rate. In promoting this sector, Turkish entrepreneurs also make a moral claim, suggesting that their profit motivations are justified by a religious concern because wealth generated through halal means indirectly helps out the poor and the needy. Yet, though these entrepreneurs frequently invoke religious morals to justify their strategies, Islamic banks appear only occasionally engaged in systematic acts of charitable giving. Why do conventional banks in Turkey engage more systematically with social welfare-related philanthropy projects while their Islamic counterparts seem less interested in similar activities? The article brings state back in and finds that this variation is an unintended consequence of the current government's social policy reforms. After election into office in 2002, Adalet ve Kalkinma Partisi (AKP, Justice and Development Party) promoted greater private involvement in public goods provision in return for offering economic privileges to partisan business groups – including Islamic banks. During this process, the government encouraged religious business groups to work with faith-based NGOs and local government agencies, capitalizing on existing partisan and solidarity networks to increase political returns. Consequently, while Islamic banks rely on religious associations and channel their contribution through Islamic charity NGOs that command a broader geographic outreach in collaboration with local government actors, conventional banks that are not part of similar societal networks either carry out independent corporate philanthropy schemes or collaborate with national government agencies.
Acknowledgments
The author would like to thank Mine Eder, Raj Brown and the participants of the International Conference on Philanthropy, State and Globalization, organized by Hong Kong Institute for the Humanities and Social Sciences (December 2012) and the anonymous referees for their very useful feedback on the earlier versions of this paper.
ORCID
Fulya Apaydin http://orcid.org/0000-0001-7208-5857
Notes on contributor
Fulya Apaydin is AXA Research Fund postdoctoral fellow at Institut Barcelona d'Estudis Internacionals, Barcelona, Spain. She specializes in comparative politics and political economy of development. Previously, Fulya's work focused on the political dynamics behind the transformation of manufacturing industry in the developing world. Her current project explores the varying risk-taking behavior of Islamic financial institutions in the Global South.
Notes
1Over the past few decades, Islamic banking sector has grown at an average rate of 19 per cent per year, which is 50 per cent faster than the conventional banking sector in several core markets like Saudi Arabia, Malaysia and United Arab Emirates, in addition to Muslim-populated emerging powers. See The World Islamic Banking Competitiveness Report 2012, Ernst & Young.
2Relatedly, some suggest that practices in search for legitimacy are closely linked to business efforts for acquiring ‘corporate citizenship’ status, which would grant legal and economic privileges to the firm.
3It must be added that though a few pro-AKP companies that were relatively bigger in size were not yet in a position to compete with big conglomerates (such as the Sabanci and Koc groups), AKP's commitment to the growth of partisan business groups did not specifically target eliminating established business groups from the economic landscape (Demiralp, Citation2009).
4Only four of these banks survived in the aftermath of the 2000 crisis, namely BankAsya, Turkiye Finans, Al-Baraka and Kuveyt-Turk. While the first two banks are owned and operated by domestic shareholders, Al-Baraka and Kuveyt Turk are classified as foreign ventures. These banks are governed by a complementary legal framework, which regulates the activities of participatory banks.
5During the 1990s, consumers holding deposits in Islamic banks in Turkey were not protected under the government insurance program (Ali, Citation2007, p. 9). Moreover, these banks were not allowed to invest in government bonds (Ali, Citation2007, p. 9).
6For links between Necmettin Erbakan and the founders of Ihlas Holding, see Karpat (Citation2001, p. 108). On the rise of Ihlas Holding, among other pro-Islamist businesses, see Atasoy (Citation2004).
7It must be noted that Ihlas Finans curiously lacked an official corporate social responsibility scheme during its most active years as the largest Islamic bank.
8See Derya Gurerk, CEO, Turkiye Finans, ‘The contributions of participation banking to economy’ December 2011. Accessed at http://www.tkbb.org.tr/index.php?option=com_doqment&cid=4&Itemid=105#
9Mutesebbis Sanayici ve Isadamlari Dernegi (Entrepreneurial Industrialists and Businessmen Association).
10Is Hayati Dayanisma Dernegi (Business Life Solidarity Association).
11Turkiye Isadamlari ve Sanayiciler Konfederasyonu (Confederation of Businessmen and Industrialists in Turkey).
12For example, ISHAD and TUSKON – both Gulen movement-affiliated business associations – regularly contribute to free break-fast dinners during Ramadan, together with Kimse Yok Mu and the local government. See http://m2.samanyoluhaber.com/Is-dunyasindan-sosyal-sorumluluk-projesi-haberi-822989.html. Similarly, MUSIAD regularly cooperates with Deniz Feneri Dernegi and publicly endorses their activities through official award ceremonies. See http://ekonomi.haber7.com/ekonomi/haber/387849-musiad8217dan-deniz-fenerine-odul. Most recently, MUSIAD and Deniz Feneri cooperated in delivering social assistance to Syrian refugees in Hatay: see http://www.milliyet.com.tr/musiad-tan-suriyeli-multecilere-5-tirlik-hatay-yerelhaber-29285/
13In 2008, 60 per cent of Turkiye Finans shares were bought by Saudi Arabia-based the National Commercial Bank. http://www.turkiyefinans.com.tr/tr/hakkimizda/tarihce.aspx
14For example, Boydak group is a member of TUSKON and its CEO sits on the board of directors of this business association. Ulker Group has been a long time member of MUSIAD (Atasoy, Citation2005, p. 173). Turkiye Finans is also represented in MUSIAD. For examples to the charitable involvement of these umbrella associations in cooperation with Islamic NGOs and local government entities, see Note 12.
15Among some of those names are Ihsan Kalkavan and Ali Akbulut. See ‘Faizsiz bankaya 50 kat talep', Milliyet, 9.5.2006. It must be noted that these ties have been severed by an intragovernmental turf war between Gulen and Erdogan supporters that resulted in a partial government overtake of this bank's management in February 2015. See http://www.milliyet.com.tr/bddk-istedi-yonetim-tmsf-nin/ekonomi/detay/2008377/default.htm
16See ‘Ciller Faizsiz Banka Acti', Milliyet, 25.10.1996.
17See ‘TOKI 280 trilyonunu Asya Finans'a Yatirdi', Milliyet, 7.4. 2005.
18For example, following the eruption of power-wars between the AKP government and the Gulen movement, TUSKON – a pro-Islamist business association with organic ties to the Gulen movement – publicly criticized this move, and offered support in favor of Bank Asya. See ‘Tuskon'dan flas BankAsya aciklamasi', Bugun, 4.2.2015.
19The following statement is from Bank Asya's web page: ‘Türk işadamlarının dünyaya açılmasında büyük pay sahibi olan TUSKON Türkiye-Dünya Ticaret Köprüsü organizasyonlarının ana sponsoru olarak Türkiye ekonomisinin gelişimini destekliyoruz'. See http://www.bankasya.com.tr/sosyal-sorumluluk.aspx
20The following statement is from Bank Asya's web page: ‘Başta “kamu yararına çalışan dernek” statüsünde olan Kimse Yok Mu Yardımlaşma ve Dayanışma Derneği'nin birçok projesinin ana destekçisi olarak personelimiz ve müşterilerimizin de katılımıyla sosyal yardımlaşma projelerine sürekli olarak destek veriyoruz'. See http://www.bankasya.com.tr/sosyal-sorumluluk.aspx
21For links between the Gulen movement and Kimse Yok Mu, see Gocmen (Citation2011, p. 164).
23For example, in selecting these students, Kimse Yok Mu relies on a previous list of families that are already assessed by local government agencies and qualify for social aid. See http://haber.kimseyokmu.org.tr/?p=categorydetails&gl=proje_kampanyalar&cl=projeler&i=497
24For Is Bank's ties to Kemalism, see http://www.isbank.com.tr/TR/hakkimizda/bizi-taniyin/tarihimiz/o-gunlerden-bugunlere/Sayfalar/o-gunlerden-bugunlere.aspx
25For a brief history of philanthropic engagements of Yapi Kredi Bank, see http://www.yapikredi.com.tr/yatirimci-iliskileri/yapi-kredi-hakkinda/tarihce.aspx; for an overview of Turkiye Is Bank's involvements, see http://www.isbank.com.tr/TR/hakkimizda/kurumsal-sosyal-sorumluluk/egitim/Sayfalar/egitim.aspx
27See http://ekonomi.milliyet.com.tr/is-bankasi-van-da-prefabrik-okul-yaptirdi/ekonomi/ekonomidetay/05.01.2012/1484622/default.htm
28For more information on this campaign, see the project website http://www.bababeniokulagonder.org/
29For more information on this campaign, see the project website http://www.denizyildizlari.k12.tr/
31 http://www.ogretmeninsiniriyok.com/, main page accessed on 1 November 2012.
35Though there is some increase under the AKP government, the total volume of education spending is substantial.
36More recently, the government announced a new incentive system that benefits the conventional banks. See http://www.sabah.com.tr/Ekonomi/2012/04/27/tesvik-sistemi-finans-sektorunun-isine-yarayacak and http://ekonomi.milliyet.com.tr/aydin-tesvik-sistemi-banka-aktiflerini-olumlu-etkileyecek/ekonomi/ekonomidetay/26.04.2012/1533113/default.htm. For an overview of incentives offered to the Turkish Banking Sector, see Arslan and Hotamisli (Citation2007).