Islamic finance, which is based on the principle of linking investments and payments to real assets, has been steadily increasing its share of global financial assets. Beyond conventional debt instruments, Islamic finance stands out through sukuk issuances that align with environmental and social considerations, making it a prominent alternative for global investors. Supported by the advantages of the Istanbul Financial Center, updated legislation, and extensive practical experience, Türkiye has emerged as a strong candidate to enter the top five countries in the Islamic Finance Development Index.


The slowdown in global growth, disputes spanning trade and finance, and recurring tariff shocks are forcing economies to seek alternative financial models. The debt-driven and fragile structure of the existing global financial system has made such alternatives increasingly indispensable, bringing Islamic finance to the forefront. Unlike speculative “bubble” arguments surrounding precious metals such as gold and silver, the Islamic financial system is firmly grounded in real assets. Based on the principle of risk sharing, Islamic finance offers tangible returns on investments and payments and is expected to play a greater role in global financial assets as a reliable alternative. Its resilience and inclusiveness are key factors supporting this outlook. Compared to conventional systems, Islamic finance demonstrates greater stability and liquidity during times of crisis and is widely regarded as an effective instrument for the fair distribution of wealth.

SUKUK AS AN ALTERNATIVE

The share of Islamic financial assets in global financial markets has reached approximately US$ 6tn. This rapid growth-up from around US$ 3tn in 2020-is expected to continue in the coming years.

Recent data indicate that Islamic financial assets currently account for nearly 2 percent of global financial assets. This share is projected to exceed 3 percent in the medium term, in line with industrial growth. During this process, the volumes of Islamic banking, sukuk, Islamic investment funds, and takaful (Islamic insurance) are expanding rapidly.

Surpassing the US$ 1tn threshold last year, the sukuk market has proven itself to be a sustainable alternative among debt instruments. In addition to conventional issuances, sukuk aligned with environmental and social objectives represent a critical option for global investors. Meanwhile, the Islamic fintech market exceeded US$ 160bn last year.

TÜRKİYE’S POTENTIAL

Türkiye’s potential has strengthened alongside the rapid development of Islamic financial assets. Approximately half of global Islamic financial assets are concentrated in the Gulf Cooperation Council (GCC) region, led by Saudi Arabia. Southeast Asia-particularly Malaysia and Indonesia-represents the second-largest regional hub. In recent years, Türkiye has been rapidly increasing its share, driven primarily by participation finance strategies.

Last year, the share of Islamic financial assets in Türkiye’s banking sector reached 8–9 percent. The government aims to increase this ratio to 15 percent in the medium term.

Having weathered numerous shocks that negatively affected global financial markets, Türkiye has demonstrated resilience and continued to develop its participation finance system. Nearly 9 percent of the country’s banking assets consist of Islamic financial assets, placing Türkiye on a strong path toward joining the top five countries among 136 nations in Islamic Finance Development Index.

PARTICIPATION INSURANCE

Türkiye’s banking authority, the Banking Regulation and Supervisory Agency (BDDK), issued the Communiqué on Compliance with Participation Principles, which clearly defines the rules governing interest-free finance practices. With this communiqué, issued in December 2025, the sector has begun operating under clearly defined scientific principles and is subject to rigorous supervision.

Participation banks, investment banks, participation finance companies, financial leasing firms, factoring and finance companies, and asset management firms were granted a one-year transition period to align their systems with the communiqué. In parallel, the necessary steps have been taken toward enacting the Law on Participation Finance. Under this law, participation insurance (takaful), participation capital markets, and social finance will be regulated through dedicated legislation.

With its robust legislative framework and strict implementation, Türkiye has been advancing strongly in Islamic financial services, while the Istanbul Financial Center (IFC) has emerged as the central base for the vision of participation finance. Through the IFC, Türkiye has positioned itself as a global participation finance hub alongside centers such as London, Dubai, and Malaysia.

Istanbul’s longstanding role in trade and commerce further enhances its credibility as a center for Islamic finance. Operating under a charter-based structure, the IFC has enabled Türkiye to improve its global standing in sukuk issuance and private-sector offerings. An asset-based investment model that supports the real economy constitutes the IFC’s core operating principle. Islamic funds and takaful institutions within the IFC form an international marketplace for Islamic insurance and pension funds.

TAX INCENTIVES AND EMPLOYMENT SUPPORT

As a natural hub of commercial diplomacy, Istanbul also strengthens the IFC’s regional influence through its arbitration capabilities in dispute resolution. Special employment incentives provided under the IFC’s unique legal status attract highly qualified professionals from the Middle East and Southeast Asia, transforming the center into a key knowledge base for Islamic finance.

Supported by tax advantages and other incentives, the Istanbul Financial Center positions the city as a product-development and rule-making hub in Islamic finance, steadily enhancing its global influence.

IFC-The vertical hub for financial technologies

The Istanbul Financial Center (IFC) is far more than a real-estate project composed of office buildings. It serves as a modern and reliable base for a wide range of sectors, from finance to technology. Operating under a charter-based structure, the IFC has been designated by government strategy documents as the primary vertical hub for participation banking and fintech (financial technologies). Through deep expertise, customized solutions, targeted market access, and niche services, Istanbul is expected to significantly strengthen its position in this field.

The engine of participation banking

Thanks to its strategic geographic location, Türkiye serves as a bridge connecting Gulf capital with Europe and Asia. This positioning gives Istanbul a significant advantage in financial operations. Consequently, the Istanbul Financial Center (IFC) functions as a “treasury hub” where capital is managed in accordance with Islamic principles. Most importantly, the IFC acts as a catalyst for increasing the share of participation banking assets to 15 percent of the overall banking system.