Ṣukūk Market in Turkey

Abstract

While there is no doubt that ṣukūk will assume an increasingly important role as a financial instrument for economic development, it is clear that Turkey will become one of the countries that will shape the future of the ṣukūk market on a global scale. With its unique geostrategic position as a bridge between Europe, the Middle East and Asia, Turkey is ideally positioned for becoming one of the most important players in the global ṣukūk market industry. If Islamic finance has not always been very popular in the country, this sector has grown steadily and ṣukūk are enjoying a steady success. The Turkish government is therefore determined to make Istanbul a financial hub for Islamic finance on a regional and global scale. With a GDP of US$769 billion in 2017 (IMF, “Turkey: 2016 Article IV Consultation-Press Release; Staff Report; and Statement by the executive director for Turkey”, IMF Country Report n° 18/110, April 2018.), Turkey ranks 18th among the world’s largest economies and appears in this context well positioned to become one of the leading players in the global ṣukūk market industry. Despite this potential, there are still many legal and financial hurdles, limiting the development of ṣukūk in the country. Efforts still need to be made to ensure a stable environment conducive to the development of this promising market.

The purpose of this chapter is to study the particularity of the ṣukūk market in Turkey and more precisely the characteristics of this sector and its prospects for evolution. While analyzing the legal and regulatory framework implemented by the public authorities, we will try to better understand what are the major obstacles to the growth of the ṣukūk market in Turkey and how to overcome them.