Leasing (Ijara) Contract and Its Application in the Participation Banks in Turkey

Abstract

Leasing (ijara), which is most widely used instrument after murabahah, is an excellently fit product to the functions of participations banks as it is asset-based. The biggest shares in leasing volume by type of asset are “heavy equipment and construction machinery” and “real estate”, which supports its asset-based attribute. The purpose of this article is to shed a light on the performance of participation banks in Turkey in terms of leasing and leasing conracts shall be evaluated if bearing any Shariah risk or not. It is proven by emprical data that regularoty support has direct effect on growth rate of leasing. Our method is desriptive, qualitative and revision of literature and balance sheets of participation banks.