Financialization and the Push for Non-state Social Service Provision: Philanthropic Activities of Islamic and Conventional Banks in Turkey

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.