THE EFFECTS OF PARTICIPATION BANKING OF TURKEY ON ENTREPRENEURIAL ECOSYSTEMS

Abstract

One of the most important factors that distinguish the developed countries from other countries is their capacity to innovate. Countries can create higher values in production processes through innovations so can compete with each other in global competition conditions. The competition through the innovations that was called by Schumpeter as “creative destruction” constitutes the main driving force of capitalist economies. In order for developed countries to maintain their existing competitiveness and for developing countries to develop into developed countries, they need various mechanisms and systems that create and sustain innovation. One of these systems is the so-called entrepreneurial ecosystems, which are complex regional formations with many sub-systems in which innovation-capable firms with high growth potential can emerge and develop. By creating and developing entrepreneurial ecosystems, countries can increase their global competitiveness and find solutions to many economic and social problems.Especially in it is necessary to create innovations to find a place for developing countries such as Turkey that caught in the middle-income trap,among developed countries by completing the development process, and such innovations can be created easily in entrepreneurship ecosystems. In this study, the financial pillar of the emergence and continuity of entrepreneurship ecosystems was investigated through participation banking and the risk capital applications providing by these banks. The “mudarabah” and especially “musarakah” which is somewhat similar to the “venture capital” method using in the USA, is among the fundraising activities of participation banks. In this study, techniques named as “mudarabah” and “musharakah” which is located between fund utilization activities of Participation Banks of Turkey, were examined and also conceptual framework of the impact on entrepreneurship ecosystems by increasing the use and effectiveness of these procedures were studied and it was seen that participation banks in Turkey did not prefer financing innovative new companies by the methods of Islamic venture capital. It was underlined that under the favorable conditions, a risk capital system has been proposed positive effects of both the participation banks, businesses and also regional development. As a result of this study, some solutions to this problem were presented.