Diminishing Partnership as Solution to Turkey's Housing Crisis: An Analysis from Islamic Law Perspective
Keywords:
Islamic law, Diminishing musharakah, Pandemic, TurkeyAbstract
The concept of decreasing musharakah or al-Musharakahtu'l-mutanaqisah involves a capital operation within a partnership, culminating in the transfer of ownership. Unlike traditional practices, this partnership model emerged in the 20th century and has since become a specialized arrangement in contemporary financial practices, notably within interest-free financial institutions or participation banks. In diminishing musharakah, the financial institution gradually reduces its share in the partnership until it is wholly transferred to the customer, who then assumes the role of managing partner. This arrangement aims at providing interest-free financing while generating profits for all involved parties, offering diverse banking services beyond permanent musharakah setups. It entails multiple individuals joining forces in an income-generating venture, with one party progressively acquiring the shares of others until they gain sole ownership through successive independent sales contracts. Diminishing musharakah is an alternative to conventional methods, particularly within interest-free financial institutions across industry, trade, agriculture, and tourism. This research investigates integrating diminishing partnership systems into Turkish housing finance, primarily through Ijarah-based diminishing musharakah financing methods, post the pandemic-induced housing crisis. The study identifies infrastructure, staff training, and product competitiveness as areas needing improvement in the participation banking sector, suggesting legal adjustments and regulatory frameworks for effective implementation. This research emphasizes the necessity of comprehensive legislative changes within Turkey's financial framework to accommodate diminishing partnership systems. It offers original insights and proposes legal amendments that uniquely contribute to participatory banking research. It presents a fresh perspective on home financing, promoting economic autonomy and housing market accessibility through innovative approaches.
References
AAOIFI Shari’ah Standards. “Shari’a Standards, Accounting and Auditing Organization for Islamic Financial Institutions.” Bahrain, 2010.
Abidin, M.A.I. Umar. Radd Al-Muhtar 'alá al-Durr al-Mukhtar, 5 Beirut: Alam al-Kutub, 1984.
Akcay, Ü. and A. R. Güngen. “The Making of Turkey’s 2018-2019 Economic Crisis.” Institute for International Political Economy (IPE), no. 120 (2019): 79-104.
Alam, M.K., and A. Ershad Uddin. “Legal and Regulatory Frameworks For Shari’a Governance Practices in the Islamic Banking Industry of Bangladesh.” Mizanü’l-Hak: Islami Ilimler Dergisi, no. 17 (December) (2023): 663–88.
Amin, H., A. Rahim, and D.A. Razak. “Consumer Acceptance of Islamic Home Financing.” International Journal of Housing Markets and Analysis 7, no. 3 (2014): 307–32.
Asadov, A., Z.M. Sori, S.M. Ramadilli, Z. Anwer, and S.V. Shamsudheen. “Musharakah Mutanaqisah Home Financing: Issues in Practice.” Journal of Islamic Accounting and Business Research 9, no. 1 (2018): 91–103.
Ayni, A.M.B. Alibniyah Fi Sharh Al-Hidayah, 6 Beirut: Dar al-Kutub al-Ilmiyah (2000).
Ayub, M. “Islamî Finansi Anlamak Iktisat Yaynlari-9.” In Islami Finans Dizisi-1. Istanbul (2017).
Bayindir, S. “Bir Finansman Yöntemi Olarak Kullanilan Sermaye Ortakliginin Islam Hukuku Açisindan Degerlendirilmesi.” Usûl Islâm Arastirmalar? 3 (2005): 139-57.
Bebercuma, H. “Mortgage Konut Finansman Sistemi ve Türkiye’deki Yap?.” Doctoral Dissertation, Marmara University, 2006.
Bendjilali, B., and T. Khan. “Economics of Diminishing Musharakah.” Occasional Paper no. 42. Jeddah: Islamic Research and Training Institute, 1995. https://ideas.repec.org/p/ris/irtiop/0042.html
Çakmakli, C., S. Demiralp, S.K. Özcan, S. Yesiltas, and M. Yildirim. 2020. “COVID-19 and Emerging Markets: An Epidemiological Model with International Production Networks and Capital Flows.” IMF Working Paper, no. 133: 1–64.
Çelik, I. “Bir Yatirim Araci Olarak Mudarebe ve Günümüzde Kullanimi.” Al-Farabi Uluslararas? Sosyal Bilimler Dergisi 1, no. 3 (2017): 381–95.
Çetin, AC. “Türkiye’de Konut Fiyatlarna Etki Eden Faktörlerin Analizi.” Journal of Applied Science of Mehmet Akif Ersoy University 5, no. 1 (2021): 1–30.
Coskun, Y. “Konut Fiyatlari ve Yatirimi: Türkiye Için Bir Analiz.” Nigde Üniversitesi Iktisadi ve Idari Bilimler Fakültesi Dergisi 9, no. 2 (2016): 201–17.
Dinc, Y. “A Suggestion on Mortgage Financing of Islamic Banks: Diminishing Musharakah.” International Journal of Trade, Economics and Finance 1, no. 8 (2017): 25–31.
Döndüren, H. Islam Hukukuna Göre Alim-Satimda Kar Hadleri. Bursa: Islam Hukuku Külliyati Yayinlari, 1983.
Durmus, A. Islam Hukuku Açisindan Günümüz Kredi ve Finansman Yöntemleri. Istanbul: Ensar Nesriyat, 2011.
Erdem, M., and H. Tatli. “Potential of Islamic Finance as Alternative Financing Option for SMEs.” International Journal of Economics, Management and Accounting 32, no. 2 (2024): 377–402.
Erkoyun, E., and D. Butler. “Turkey Central Bank Stuns Market with 500-Point Rate Hike to 50%.” Reuters, March 21, 2024. https://www.reuters.com/markets/rates-bonds/turkey-hikes-key-rate-500-points-50-surprise-move-2024-03-21/.
Gül, A.B. “Türk Bankacilik Sisteminde Konut Kredileri: Ipotek Teminatli Menkul Kiymet ve Ipotege Dayali Menkul Kiymet Uygulamalari.” Finansal Arastirmalar ve Çalismalar Dergisi 916 (2017): 39–58.
Hammad, N. Iktisadî Fikih Terimleri Sözlügü. Istanbul: Iz yay, (1996).
Hasan, Z. “Islamic is the Diminishing Musharakah Model Used for Home Financing?” Turkish Economic Review 3, no. 3 (2016): 343–452.
Hassan, M.K., M.M. Hossain, and A. Muneeza. Hire Purchase Under Shirkah Al-Milk (HPSM) in Islamic Banking and Finance: A Shari’ah Analysis. Palgrave Macmillan Cham: Switzerland, 2024.
Hussen, M.S. “Government Financial Incentive and Firm Performance: Evidence from Turkey.” International Journal of Economics, Management and Accounting 30, no. 2 (2022): 259–83.
Ibeçoglu, M.G. “Türkiye’deki Katilim Bankaciligi Uygulamasinda Konut Finansmani Için Alternatif Bir Yöntem: Azalan Ortaklik Sistemi.” Kirklareli Üniversitesi Sosyal Bilimler Dergisi 7, no. 1 (2023): 135–54.
Inanir, A. “Islâm Hukuk Düsüncesinde Bilesik (Mürekkep) Mâlî Sözlesmeler.” Uluslararasi Islam Ekonomisi ve Finansi Arastirmalari Dergisi 3, no. 1 (2017): 7–39.
Kacir, T. “Katilim Bankaciliginda Uygulanan Finansal Kiralama Yöntemindeki Risk Faktörünün ?
Islam Hukuku Açisindan Degerlendirilmesi.” Manisa Celal Bayar Üniversitesi Sosyal Bilimler Dergisi 18, no. 3 (2020): 454–66.
Kameel, A, M. Meera, and D.A. Razak. “Home Financing through the Musharakah Mutanaqisah Contracts: Some Practical Issues.” Journal of King Abdulaziz University: Islamic Economics 22, no. 1 (2009): 3–27.
Kasani, A.B.M. Badai Al-Sanai Fi Tartib al-Sharai, 6. Beirut: Dar al-Kutub al-
Ilmiyah, 1974.
Kawamilah, N.A.K. Al-Musharakah Almtnaqsh Wa-Tatbiqatuha al-Muasirah: Al-Bank al-Islami al-Urduni Namudhajan. Kuala Lumpur: IIUM Press, 2006.
Kaya, N.E., and B. Gönültas. “Merkez Bankalari Sikilasmayi 2023’te Zirveye Tasidi.” Anadolu Ajansi, December 30, 2023. https://www.aa.com.tr/tr/ekonomi/merkez-bankalari-sikilasmayi-2023te-tasidi/3096116.
Loundy, D. “Islamic Mortgages.” In Contemporary Islamic Finance: Innovations, Applications, and Best Practices, 283–92. New Jersey: USA: Wiley, 2013.
Malik, Anas I. Al-Mudawwanah al-Kubrá Riwayah Sahnun, 5 Saudi Arabia: Wizarat al-Awqaf al-Saudiyah-Matba'at al-Sa'adah, 1324.
Moghul, U.F. A Socially Responsible Islamic Finance: Character and the Common Good. London: Palgrave Macmillan, 2017.
Öztürk, F. “Konut Krizi: Kiralar 4 Yilda En Az 6 Kat Artti, Yatirimci Uzaklasti, Bankalar Kredi Vermeye Gönülsüz.” BBC, June 5, 2023. https://www.bbc.com/turkce/articles/c3g0xylry03o.
Paylan, M.A., and Y.B. Kavas. “The Effect of Reduced Perceived Financial Well-Being on Domestic Product Purchasing Behavior: The Case of Turkey During COVID-19.” International Journal of Economics, Management and Accounting, (2021): 331–60.
Qudamah, A..M. Al-Mughni, 5 Riyadh: Dar Alam al-Kutub, 1997.
Rammal, H.G. “Financing Through Musharaka: Principles and Application.” Business Quest, (2004): 1–7.
Rosly, S.A. Critical Issues on Islamic Banking and Financial Markets: Islamic Economics, Banking and Finance, Investments, Takaful and Financial Planning. Indiana: Authorhouse, 2005.
Sabirsiz, E., and M. Söhret. “6 Subat Depremlerinin Türkiye Ekonomisi Üzerindeki Makroekonomik, Sosyal ve Çevresel Etkileri.” Akademik Yaklasimlar Dergisi 15, no. 1 (2024): 571–97.
Sarakhsi, A.B.M. Al-Mabsut. 11. Beirut: Dar al-Ma'rifah, 1993.
Sari, Ö.B.Ö. “The Turkish Housing System: An Overview.” In Housing in Turkey, 1st ed., 11–29. Routledge, 2022.
Selim, M. “Financing Homes by Employing Ijara-Based Diminishing Musharaka.” International Journal of Islamic and Middle Eastern Finance and Management 13, no. 5 (2020): 787–802.
Shubayr, M.U. Al-Muamalst al-Maliyah al-Muasirah Fi al-Fiqh al-Islami. Amman: Dar Al-Nafaes, 2007.
Smolo, E., and M.K. Hassan. “The Potentials of Musharakah Mutanaqisah for Islamic Housing Finance.” International Journal of Islamic and Middle Eastern Finance and Management 4, no. 3 (2011): 237–58.
Tanrivermis, H. “Possible Impacts of COVID-19 Outbreak on Real Estate Sector and Possible Changes to Adopt: A Situation Analysis and General Assessment on Turkish Perspective.” Journal of Urban Management 9, no. 3 (2020): 263–69.
“TCMB.” Central Bank of the Republic of Türkiye, 2020. https://www.tcmb.gov.tr/.
Tunç, H. Katilim Bankaciligi: Felsefesi, Teorisi ve Türkiye Uygulamasi. 8th ed. Istanbul: Nesil Yayinlari, 2010.
Uddin, A.H.E. “Banglades’teki Islam Bankacilik Uygulamasinin Fikhî Açidan Incelenmesi.” Doktora Tezi, Marmara Üniversitesi Sosyal Bilimler Enstitüsü, 2020.
______. “Economic and Social Make-Over in Turkey: By Erdogan.” International Journal of Economics, Management and Accounting 26, no. 1 (June 2018): 135–55.
______. The Regulation of Islamic Financial Institutions (IFIs) and Ethical Oversight in South Asia: An Islamic Law Perspective. Cham: Springer-Verlag GmbH, 2025.
Uddin, A. E. “The Perplexing Issue Of Monopoly (Ihtikar) In Islamic Law And Its Negative Impact On Society: Evidence From Turkey’s Perspective.” Dinbilimleri Akademik Arastirma Dergisi 23, no. 2 (September 2023): 805–30.
______, and H. Okur. “Empowering Communities: Redefining Zakat Distribution in Bangladesh Post-Covid-19.” Kocatepe Islami Ilimler Dergisi 6, no. 2 (2023): 419-38.
Umrani, A.M. Al-Uqud al-Maliyah al-Murakkabah: Dirasah Fiqhiyah Ta'siliyah Wa-Tatbiqiyah. Riyadh: Kunuz Ishbilya Publisher, 2010.
Uras, U. Owning a Home a Dream: Housing Crisis Hits Turks Ahead of Polls. Aljazeera, 2023. https://www.aljazeera.com/news/2023/5/5/owning-a-home-a-dream-housing-crisis-hits-turks-ahead-of-polls.
Yanpar, A. Islami Finans. Istanbul: Scala Yayincilik, 2014.
Zayla'i, A. Y. Nasb Al-Rayah Li-Ahadith al-Hidayah. Vol. 3. Riyadh: Mu'assasat al-Rayy?n, 1973.
Zuhayli, W. Al-Fiqh al-Islami Wa-Adillatuh. Dimashq: Dar al-Fikr, 1984.
