An Alternative Non-Interest Real Estate Financing Model as a Shadow Banking Practice: Mortgage-backed Non-interest Shared Finance Model

Abstract

Housing finance is crucial for the sustainable growth of the country's economy. This issue is of even greater importance for emerging economies such as Turkey. In this study, especially residential real estate financing and financing interest-free financing model based on saving being implemented in Turkey is examined as an alternative model. From this point of view, the current implementation is considered to be a shadow banking application. This method, which is referred to as a mortgage-backed non-interest shared financing model in this study, is outside the regulations and controls in the banking sector. This situation poses a significant potential risk in terms of the country's economy. In this regard, regulatory authority is urgently required to make arrangements. Regulations should be in the areas of licensing and supervision in particular.