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Finance & Banking vocabulary · Banks & Institutions

Participation bank

Meaning in finance & banking, with examples

nounCommon term

In finance & banking, participation bank means: A bank that works according to interest-free finance principles, sharing profit and loss with fund owners and financing customers through trade-based contracts instead of interest-bearing loans.

In Turkish: katılım bankası

How it is used

The term used in Türkiye; internationally the same model is usually called Islamic banking. Customers hold participation accounts and receive a profit share instead of interest. A common financing method is murabaha, in which the bank buys an asset and sells it to the customer at an agreed mark-up.

Example sentences

  1. The customer wanted interest-free financing, so she applied to a participation bank.

  2. Instead of interest, a participation bank pays a profit share on participation accounts.

Common collocations

  • participation bank
  • participation account
  • profit share
  • interest-free banking
  • Islamic finance
  • commercial bankA bank that takes deposits from people and businesses and uses them to make loans and offer payment services.
  • depositMoney that you put into a bank account, or the act of putting it there. For a bank, customer deposits are its main source of funding.
  • time depositMoney placed in a bank for a fixed period, such as 32 days or one year, at an agreed interest rate. Taking it out early usually means losing some or all of the interest.
  • regulatorA public body that makes and enforces the rules for an industry. Banking regulators license banks, set capital rules and inspect banks.

More terms: Banks & Institutions

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This page explains English vocabulary for learners. It is not financial advice.