IRCIEF: An important step toward Istanbul becoming world's Islamic finance and banking capital

IRCIEF: An important step toward Istanbul becoming world's Islamic finance and banking capital

Istanbul's Sabahattin Zaim University's new research center carries out its studies to satisfy the need for a more institutional approach in Islamic economics and finance, as well as bring the research to a broader audience

Islamic Economics and Finance, to which Turkey holds a natural, historical and cultural bond, have always reeled from a lack of studies and research. This acted as the core motivation for Istanbul's Sabahattin Zaim University (IZU) to establish the International Research Center for Islamic Economics and Finance (IRCIEF), a first in Turkey. It primarily carries out its studies to satisfy the need of a more institutional approach in Islamic economic and finance as well as to carry the researches to a broader range.

The IRCIEF aims at establishing mutually beneficial close collaborations between research-based institutions in order to produce relevant research to guide policy design and implementations. It also organizes workshops and training programs to provide students, researchers, organizations and the society as a whole, with opportunities toward a better understanding and interpretation of Islamic economics, finance and banking system.

For all these purposes, the center will organize International Islamic Economics and Finance Conference (IIEFC), Islamic Economics and Finance Summer School in collaboration with national and international institutions, and publishes the Journal of Islamic Economics and Finance (JIEF with the Participation Banks' Association of Turkey (TKBB).

With the increasing growth of the global Islamic finance market, Islamic economics, Islamic finance, Participation Banks and Islamic Insurance has come into the spotlight over the recent years. The IRCIEF's one of the main objectives is to support and encourage the academics, practitioners and researchers who work in the field and enhance relevant literature. The organization is open to all participants who have interest in the field of Islamic economics, finance and banking.

In line with these objectives, the center has been conducting its research in the following areas:

Scientific publications in the field of Islamic economics and finance,

Investigation of the Ottoman Rumelia Monetary Foundation as financial institutions,

Examination of Participation Banks in Turkey and the world,

Developing relationships with research centers in the field of Islamic economics and finance,

Organizing conferences and training programs with similar institutions in the field of Islamic economics and finance

Turkey's President Recep Tayyip Erdoğan has already put emphasized that Istanbul in the near future should become the world center of Islamic finance and economics and to realize that goal there is an overwhelming need to establish new institutes for an increased cooperation between the owners and factors of productions, like financial institutes, entrepreneurs, universities and public representatives.

The IRCIEF will try to establish cooperation among organizations which deal with production and trade activities. It is essential for Islamic finance to channel savings into real production, investment and trading activities.

Daily Sabah's Mehmet Cebeci (R) speaks with Dr. Arif Ersoy about Sabahattin Zaim University's Islamic economy studies.

Speaking to Daily Sabah recently, Director of IRCIEF Prof. Dr. Arif Ersoy discussed his institute's aspirations and Islamic economics in general with Mehmet Cebeci, a Ph.D. candidate in the field.

Mehmet Cebeci:What is the mission of IRCIEF at İstanbul Sabahattin Zaim University?

Dr. Arif Ersoy: The aim of this center is to bring owners of the factors of production together in order to support each other in organizing production and trade activities. Today there are many obstacles on the way to cooperation and solidarity among owners of factors of production. Small and medium sized enterprises (SME) face many problems in financing their production and marketing process. Participation banks or Islamic banks in Turkey also face different challenges to meet the financial needs of SMEs. Likewise, supporters of our institute are participation banks. They should support producers and traders of real value. It is essential for these institutes to make profit on production, trading and investment activities. They cannot make profit only on symbolic values. To some extent interest means gains which are obtained from money trading activities.

Our main objective is to bring representatives of our factors of production together; labor, owner of capital (renewable/fixed capital), representative of local or national government, representative of SMEs and universities.

The center will also intensify its research activities on finding new solutions for the problems encountered by SMEs, who are the main consumers of Islamic banks. Supplying only interest free financial opportunities are important, but it is not enough. There are other problems that should also be taken care of and we should help them solve these issues.

I hope this institute will bring together, bankers, producers, scholars and bureaucrats to support our entrepreneurs as SMEs account for almost 90 percent of Turkey's national production. They are the backbone of our economy. Thus, by supporting them, Islamic banks will help increase the gross production. Without increasing production, it is not possible to increase the wealth and prosperity of our nation.

M.C.: Does Islamic Economics mean Interest Free Banking only?

A.E.: Islamic Economics is not about Interest Free Banking only. It also deals wıth increasing real production and establishing a just distribution of output among the different factors of production as well as supporting the needy, who are not able to produce.

Production can be realized by bringing different owners of factors of production together. Islamic Banks should support production in order to increase output. There are three ways of earning money in Islamic Banks; 1) by increasing production, 2) sharing profits obtained by financing trade activities 3) by obtaining rent (sukuk) from financing fixed capital formations, investing in building or machineries.

M.C.: Do you think it is possible to work by staying in the borders between Islamic economics and capitalism?

A.E.: Of course, today capitalism is the prevailing and dominant system, but it is producing lots of problems. We say that we can find new solutions to the prevailing problems of our time by adopting the principles of Islamic economics. As an example of natural economics, it is suitable for human nature. It is a sharing economics. Not just for us, even for the Capitalist countries, it is necessary to study and develop Islamic economic tools in order to solve some of the problems we face today, where monopolization is on an ever increase

It is essential for everyone, besides scholars and economists, to study the principles of Islamic economics in order to find economic, ethical and social solutions, especially for the developing and the less developed countries.

Interest is a tool of increasing monopolization. Throughout capitalist history, whenever interest is implemented, the process of monopolization has taken place. Today the world economy is under the control of financial capitalist monopolies. Increasing the control of monopolist multinational firms on the world economic order has created a lot of economic and political problems, tensions and conflicts on a global scale.

M.C.: Will this institute only offer services for graduate or post graduate studies?

This year we have started graduate programs on Islamic Economics and Finance. In post graduate studies we have masters and Ph.D. students. On the other hand, we offer Islamic Economics and Law in Arabic for masters and Ph.D. degrees. Next year, we are planning to open the programs in English.

M.C.: Will economics be the only focus of this institute?

One of our aims is to increase the efficiency of SMEs in our economy. We will also cooperate with problems of industrial zones in Istanbul and nearby areas. We know they have a number of problems. Our institute will help them in solve their problems regarding education, marketing, finance, accounting, developing new standards, and innovations, etc. To do so, our university will take support from other universities as well.

We will also try to establish new institutes jointly with cooperative and participation banks, business organizations, public institutes and universities to increase economic efficiencies of SMEs.

M.C.: Could you please compare the systems? What are the basic differences Islamic economics have compared to socialism or capitalism?

We divide the economic systems in two. One is based on cooperation and sharing economics which is called Islamic economics and the other economic system is monopolistic economic system. We also divide the monopolistic economics into two categories. If monopoly is based on political power we call it socialism. Socialism is now out of date, because it couldn't be able to produce new solutions for the encountered problems during the second half of the 20th century, it collapsed. On the other hand, if that monopoly is based on capital monopoly, we call it capitalism. Capitalism is also losing its problem solving ability of since the beginning of the 21st century. Even today this system is producing new problems.

Islamic economics, in comparison, is a completely different system. It is a sharing economics based on parallel interest between owners of factors of production, between social groups and nations, unlike the prevailing capitalist system which is based on conflicting interests.

Capitalist countries believe that their gains must mean loss of others. They have exploited two third of the humanity for centuries, leaving the majority impoverished.

Islamic Economics, however, is human-centered natural economics. It is an economic order which will function for the betterment of all humanity, especially for the betterment of the poor and needy.

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