CREDITING AND CREDIT SYSTEM
Prof. Dr. Sabri Tekir
One of today's current economic issues is whether an interest-free system can work. Interest plays an important role, especially in the formation of savings and the allocation of these savings in the form of loans, that is, in the supply and demand of loans. However, although interest has this role, other economic and social problems also arise with interest. Problems that are difficult to compensate and create great injustices, such as the decrease in the value of money, increasing costs, causing inflation and therefore price anarchy, causing imbalances in income distribution and class differences in society to deepen. Due to these issues, there have been constant discussions and research on how an interest-free system can be operated. One of these studies is the interest-free banking studies carried out in Akevler Credit and Solidarity Cooperative, which has been operating in Izmir for a long time.
In this paper, we will try to discuss the parts of these studies carried out by a team, especially those related to the functioning of the credit mechanism. First, the importance of savings in the economy and then the subject of credit will be discussed. In the last part, we will focus on the loans to be given to various sectors in our interest-free banking model.
I — SAVINGS AND THE IMPORTANCE OF SAVINGS
Today's economies, whether capitalist or socialist, attach great importance to the relationship between savings and investment. One of the important sources of capital accumulation required for development is savings. A country's national income balance level is also known as the income level at which savings and investments are equal.
Interest, which characterizes the capitalist system, is also applied by socialist countries when it comes to encouraging and directing investments. In socialist economies, individuals, if they wish, can deposit some of their income as savings in state banks and receive interest in return. According to socialist economists, this interest is essentially to prevent acquisitiveness. Again, in socialist economies, the interest rate is determined depending on capital demand, just like in capitalist economies. If the demand for capital (usually made by public enterprises) exceeds the demand for available capital, the interest rate is increased; Otherwise, if the existing capital remains idle, that is, cannot be invested, the interest rate will be reduced (1).
Savings are also of great importance for the development of underdeveloped economies. In these countries, where there are traditional forms of savings such as accumulating precious metals such as gold and silver, purchasing real estate, smuggling savings abroad and accumulating foreign currency, all kinds of measures are taken to encourage savings. Savings in these countries:
a-Cutting down consumption,
b-To persuade the society to save money,
c-Saving incentives (increasing interest rates, capital
Establishment of the food market, expansion of banking, etc.) to implement,
d-Increasing and encouraging investment opportunities,
Various methods are being tried, such as developing sectors with a high tendency to e-save (for example, company businesses have a higher tendency to save rather than private businesses) (2).
Saving is generally defined as "giving up spending all or part of one's income on consumer goods and services." There are other definitions of savings.
It is known that expenditures are an extremely important link for the economy to remain in a constant state of dynamism. If saving means not spending, it may become one of the most important reasons for recession in the economy (3). Due to this negative effect that may arise from reducing expenditures, it is useful to understand the phenomenon of saving, which is present in human nature and can vary according to time and environmental conditions, as follows: Saving is the increasing amount after meeting the daily needs of the person. Saving their income to buy durable goods. Otherwise, it would be wrong to understand savings as people saving some of their income by cutting down on their daily needs (4).
It is argued that savings, which are an important factor in realizing investments, can only be achieved with interest. There is consensus among capitalist and socialist economists on this issue. However, although interest seems to have such a function in terms of savings at the first stage, it causes waste, not savings, as it drags those who earn interest income into a habit of easily spending what they earn easily. Therefore, it is necessary to be suspicious about the function of interest in the formation of savings (5).
II — EVALUATION OF SAVINGS - CREDIT INSTITUTION
Credit, which has various types in terms of maturity, secured or unsecured, production or consumption, is "the act of granting an existing purchasing power for a certain period of time and with the condition of taking it back, or becoming a guarantor for the payment of a given asset" (6).
Credit is a collateral institution that allows people to postpone consuming some of their income and allow others to consume the savings they create. In other words, credit is a way of using the savings accumulated in society. If the values that emerge in the form of savings are not given to the producer as a loan and are left idle, people who save may not be able to find the goods they hope to buy in the future, and there will be no point in saving. For this reason, the collected savings should be given as loans to producers (7).
When considered from a social perspective, it will be seen that credit is at least as important as trade. Because it is not possible to find goods to be used in commercial exchange without making investments, that is, without carrying out a production activity. Therefore, the credit institution that allows savings to be channeled into investments is an extremely necessary institution.
Contemporary economies are economies that have entered the credit economy. For this reason, credit institutions and credit mechanisms constitute an important part of today's economic life. Increasing the country's national income level depends on the existence of a developed credit mechanism that will meet the credit needs related to economic activities. Essentially, ensuring price stability in the economy is possible with a credit policy carried out according to rational principles. If the credit volume grows more than the need, it disrupts the macro balances of the economy and causes inflation. Likewise, unnecessarily narrowing the credit volume and not expanding it sufficiently may cause contraction and stagnation in the economy (8). Therefore, the necessary arrangements must be made to establish the credit supply - credit demand balance, control the total credit volume or at least connect it to automatic mechanisms ( 9).It is possible to summarize the benefits and roles of loans in the economy as follows:
a-Credit is a means of circulation,
b-Credit allows capital accumulation,
c- It causes acceleration and increase in credit production,
d- It ensures the transfer of capital that is ready to be used but idle to the business field,
e-Credit saves entrepreneurs from the burden of accumulating the capital required for their businesses with their own savings and waiting for a long time to do so (10).
Today, banks are financial institutions that carry out activities that we can call credit trading. They extend loans based on the deposits they collect. Although banks have the opportunity to create commercial, official and interbank deposits in addition to demand and partially term savings deposits, the main source of their loans is savings deposits and commercial deposits. Banks are intermediary financial institutions that compare those who offer loans with those who request loans, and they are also an element of trust for the lender. With these qualities, banks have become extremely important institutions for economic development. Today's banks, which conduct credit trade based on the principles of liquidity, trust and profitability, are subject to the strict supervision mechanism of the state.
Credit automatically generates rent. It would not be entirely unfair for the person who obtains the rent to give or pay something in return for the rent he has obtained. When the drawbacks are eliminated, paying interest in return for a loan may also be justified. However, the issue that needs to be discussed here is to whom this interest will be paid, that is, who will be entitled to the interest.
Credit is nothing but a collateral institution.
According to this view, it is not the person who makes the savings that actually provides the loan, but the one who gives the guarantee. Guarantee can only be given by the state. In that case, the interest to be paid for the loan should belong to the state that provides the guarantee, not to the savers. It is also possible to give the following example: Let's take a worker. If this worker receives his wage in return for his work and spends it two months later, he will have the burden of protecting his wage for two months. In this case, if this worker had received his wage two months later, there would be no change for him. Due to the possibility of not being able to receive it in the future, the worker He prefers to receive his wage in cash. If the state had guarantors for him and eliminated the risk of not being able to receive his wage in the future, he would have preferred to receive his wage two months later instead of receiving it in cash. In this case, such a practice would at least have saved him from the burden of protecting his money. It would be more logical for the worker to pay some amount to the state, rather than the state to the worker. At this point, it would be possible to establish a connection between tax and interest (11).
III - CREDIT CRITERIA AND MAIN CREDIT TYPES IN THE INTEREST-FREE SYSTEM
The most important issue in an interest-free banking system is not to collect deposits, but to determine how the collected deposits will be distributed in the form of loans. The rent generated by the loan requires this. In the interest-based system, interest is accepted, at least partially, as the return or cost of this rent. It is certain that in the interest-free system, giving loans completely free of charge will result in completely disrupting the economic and social balance. In order to prevent these negative consequences, it is necessary to determine the credit utilization criteria in advance and apply them accordingly in the interest-free banking system. Otherwise, a greater tool of exploitation than the interest-based system would be revealed.
We can determine the credit utilization criteria that should be present in the interest-free banking system as follows:
A) Mutual Crediting Criteria
The principle of granting loans to everyone within their deposit volume and deposit limit is the first loan criterion of an interest-free bank. Thus, it is possible that the capital of everyone who has deposits will be doubled, and therefore the production will also be doubled. We can explain this with an example: Let's think of a person who wants to buy a refrigerator. When he deposits half the price of the refrigerator into the bank in installments, he is given a loan equal to the price of the refrigerator and is allowed to purchase the refrigerator in cash. At the same time, the depositor has the right to buy the refrigerator from the company he wants. Thus, the longer he allows others to use his money, the longer he will use other people's money. With such a form of credit, savers will have the opportunity to purchase goods in cash, and factories will have the opportunity to sell their goods in cash, thus gaining the opportunity to continue their operations with a small capital. Thus, by substituting the mutual credit system instead of interest, the drawbacks of interest will be eliminated and savings will be encouraged through the credit mechanism.
B) Credit Against Tax Criteria
Tax can be considered as the share allocated to the society from the income obtained by the society (natural and legal persons) within a certain period. It can be accepted that those who produced by using capital and labor marginally paid more taxes because they earned more. Therefore, those who make the best use of production factors will be in a superior position than others in terms of the right to use credit. Giving everyone a loan in proportion to the taxes they have paid in previous years constitutes the second of the credit utilization criteria. However, there are some features that must be present in the tax system in order for the tax to be a basis for credit. We can specify these features as follows:
— Tax must be based on the citizen's declaration. In other words, since it is possible to get a loan in return, the one who pays more taxes should get more credit, and the one who pays less taxes should get less credit. In this way, citizens will be prevented from falling into difficult situations with the state regarding taxes, and therefore justice will be ensured in taxes and credit usage.
- The rate, amount and subject of taxes should be clearly determined and should not be changeable by political powers at any time. In other words, the citizen who pays taxes to the state should know exactly the amount of credit he can receive in the next year, and no change should be made in this regard. The tax should be paid first and the loan should be taken later. In other words, taxes paid in previous years should form the basis for future years' credits. In other words, instead of taking taxes by granting loans, a system of providing loans in return for the taxes paid should be implemented. Instead of just the tax of the past year, taxes paid in previous years should be taken into consideration, for example, agricultural loans - the total tax of the past ten years in industrial loans. For commercial loans, a loan of forty times the previous year's tax should be given.
C) Credit Criteria to Employees
The third of the credit accrual criteria is the criterion of giving credit to the employee according to the days he worked. This criterion is essentially aimed at ensuring full employment. Such an application can enable the evaluation of labor that could be wasted or worked inefficiently. Again, this practice will enable the total labor force in the country to be directed with credit for future production. The employee loan criterion will be applied by giving credit to each employee for the days he works, in proportion to his daily wage. While explaining construction loans, this subject will be explained in more detail with examples.
D — Successful Loan Criteria
People to whom the interest-free bank gives loans will undertake to deliver either a property or a real estate to the bank in return for the loan they receive. Since imposing a penalty on a contractor who does not fulfill his commitment will be interest, there will be no such thing as a penalty application. The sanction that the bank will impose against the contractor will be to increase or decrease its credit allowance. The credit allowance of the contractor who cannot fulfill his commitments or close his loan or close it late will be reduced. The credit allowances of those who fulfill their commitments or pay off their debts ahead of time are increased. Essentially, this application can be a simple and effective application to keep the success rate high (12).
E — Project Loans Criteria
It is possible to allocate loans to projects determined by authorized persons to contribute to the economic, social and cultural development of the country on a large scale, in accordance with the decisions to be taken. Particularly projects aimed at the implementation of new technologies will have priority in this regard.
Today's banking system follows a method of granting loans through personal relationships and political influence, rather than determined criteria. This practice causes people or organizations in the banking sector and their environment to gain great wealth by benefiting from the social value accumulation on a large scale. It is possible to find the unsystematic (disproportionate) in credit distribution at the basis of social unrest and economic imbalances. The phenomenon of monopolization essentially results from the unbalanced functioning of the credit mechanism. In order to prevent the phenomenon of monopolization in the economy, the credit system and credit institutions must be reformed. This can be achieved by ensuring that certain criteria are applied in loan distribution in the first place.
IV — INTEREST-FREE BANK. LOANS TO BE GIVEN BY
It would be useful to provide information about the loans given by interest-free banks and their functions. Because the bank's credit criteria will basically show themselves in these loan types.
A) İnşaat Kredileri
One of the sectors to which loans will be given by the bank, and the most important one, is the construction sector. Because this sector has a feature that pushes and motivates other sectors. For this reason, it is beneficial to direct loans primarily to the construction sector ([1]3). Construction loans are a type of loan given to those who want to do construction and those who want to establish sites for any purpose.
Those who want to use construction loans issue shares with bank guarantee in return for the building or site they will build. Bank loans are generally used in this way by issuing shares. The principle of using loans in proportion to deposits, which is one of the general principles in using bank loans, is also valid here. However, due to the characteristic feature of the construction sector, it is also possible to apply the principle of first loan then deposit, instead of first deposit then loan. Since instead of a loan against a deposit, a loan or deposit can be realized by selling or not selling the bills, the deposit from one enterprise will turn into a loan for another enterprise, thus solidarity between enterprises may be possible. Interest-free banks will play the biggest role in such solidarity. Since construction loans can be used as a tool of abuse, corruption and oppression when not given according to certain criteria and values, the principles on this issue will need to be determined. It is possible to explain construction loans by dividing them into types as follows.
1 — Labor (Employment) Credit
In the construction industry, everyone working in the construction industry is given a labor credit based on their professional degree. This loan can be used by working in construction with a contractor. Since contractors will only have the opportunity to use their own loans when they employ workers, this loan will necessarily bring the employee and the employer together and provide employment to a large portion of the unemployed, thereby benefiting from the driving force of the construction industry.
Gerek işçi yanında çalıştığı müteahhidini, gerekse müteahhit çalıştırdığı işçisini serbestçe değiştirebilecektir, ancak, kısa vadede iki taraf da birbirlerine ihtiyaç hissedeceklerinden bu değiştirme pratikte pek görülmeyecek ve her iki tarafın da başarısı birbirlerini memnun etmelerine bağlı olacaktır (15).
İşçilik Kredisinin Fonksiyonları
It is possible to summarize the functions of labor credit as follows:
- Since labor credit can be given to everyone in the investment sector, it will prevent unemployment due to lack of capital. Because this loan to be applied in the construction sector aims to employ those who cannot find the opportunity to work in other sectors related to the production of consumer goods, there is a possibility that there will be no hungry and unemployed workers left.
- Since the system is based on the aim of providing at least the daily needs of those who are able to work, it is possible for the consumption event to occur to activate other sectors and achieve the balance of production and consumption in the economy.
- It will enable the utilization of the idle labor force in society.
- The buildings or sites that will emerge as a result of the use of these loans in the construction sector will ultimately contribute to social welfare as they will remain in the community.
2 — Material Credit
In addition to labor wages, contractors should also be given material credit. The materials to be used in construction will either be ready-made materials, in which case the labor cost will be reduced; or almost all of it can be done in the form of labor. For example, while ready-made materials are often needed in the establishment of a factory, this may not be necessary in the revival of a field. Therefore, since loan amounts may change depending on whether the material ratio is high or low, investments will accordingly shift to industry or agriculture, thus ensuring inter-sectoral balance in investments.
In order for material credits to perform this function, this credit must be in an amount determined by a certain coefficient of the labor credit, which can be changed according to time and need. For example, if 3000 IA material credits are given in return for 1000 land bonds labor credits, the coefficient is 3. As we mentioned, the coefficient should be changeable when necessary (16). Material loans will contribute greatly to the employment of labor as they will encourage the contractor to employ as many workers as possible.
3 — Employer Loan
The use of labor and material loans from construction loans is possible if the contractor has an employer loan. In order for the contractor to be given an employer loan, he must be competent to do the work he has undertaken. The existence of such a driver's license will be determined by the bank. The bank will rely on objective criteria when making this determination. We can summarize these criteria to be used by the bank as follows:
a-Collection. It is an important element for determining the driver's license at the beginning.
b-Success. It is an important element in determining whether the loan should be increased or decreased.
c-Continue. The loans of those who leave the job unfinished will be cut and they will not be given loans again. In this way, the credit of the contractor who completes the work on time will be protected, and the credit of those who leave it unfinished will be cut, so contractors will only start work that they believe they can achieve and thus will be able to protect their credit. Late or early sale of the completed construction may also cause the loan to increase or decrease.
The person who first starts construction on vacant land is entitled to a construction loan and the job is tendered to him. Of course, the criteria mentioned above will also need to be applied here. The conditions under which the tendered work will be taken back from the contractor will also be written on the land deeds. If the contractor does not fulfill or cannot fulfill these conditions, the contractor will abandon the work by transferring what he has done to another contractor (17).
B — Industrial Loan
As it is known, production takes place within a certain process. This process may consist of many stages. In other words, various stages go through from the initial production of a good to its being turned into a finished product and put on the market. Crediting is difficult at all stages, especially in industrial production. For this reason, it is mandatory for both the distribution of general service shares and the equitable distribution of credit to give credit in the industry only at one stage of production and to take the general service share at the crediting stage.
Giving industrial loans at a single production stage may have many effects. First of all, since the loan given will be transferred to the previous stages of production in the form of advances, these stages will also benefit from the loan. We can give an example as follows: If we consider that the credit in iron production is given to those who manufacture iron rolling stock, these furnaces will also benefit from the credit, as those who receive the credit will order it with cash to the smelting furnaces that produce iron billets. If we take the chain further back, the bakeries will benefit the transporters who carry the ores, and they will benefit the miners in the same way. Thus, the credit we give at only one stage of production will spread backwards and affect all previous stages.
This backward effect of the loan will also be seen forward. The borrower obtains a kind of loan by selling the finished and semi-finished goods he produces on credit to those who will later obtain new products from them. For example, the rolling mill may give iron to the wire mesh factory to be paid after the goods are manufactured. The wire mesh manufacturer may also have given the wire meshes he manufactured to the construction contractor on credit to be paid when he receives the allowance (18).
Thus, the fact that the credit is given only at one stage of production will mean that the credit is not used only at that stage, but is injected into every stage from the beginning to the end of production. However, there are also some drawbacks that such an application may cause. We can summarize these drawbacks as follows:
If the person to whom we give credit at any stage of production has established a monopoly, then he will dominate all the stages before him and will have the opportunity to exploit them by forcing them to buy cheap goods. Credit becomes the most important tool in this exploitation business.
There are some precautions that should be taken to prevent loans from causing these negative developments:
a-First of all, established monopolies must be eliminated.
b-Secondly, the general service share or tax burden must be charged to the people receiving the loan.
c- General service share should not be taken from other stages of production.
When these measures are taken, entrepreneurs who carry out other production stages will be able to compete easily with those who are given loans under equal balance conditions, as they will not have tax burdens on the one hand, and will be able to cooperate with whomever they want within the free competition system, on the other hand.
In order to maintain free competition, loans must be granted by banks. Loans will be given in the form of bank guarantee, and the bank guarantee amount will be written on the credit cards given to customers. If a transaction is made with the person who issues the bills, which we can call credit notes, and the provision is not paid, the bank will make the payment, but the bank will have recourse to the customer.
The bank's guarantee will be in two ways: Guarantee for the bank
-Either in return for a material guarantee or real estate,
—Or it may be possible in return for the guarantee of a solidarity partnership. In case the debt is not paid, the bank will be able to recourse to the thing subject to these two guarantees.
The stage at which production will be credited will be determined by the bank.
It is possible to compare the general service share to today's added value. However, the fact that this added value is paid only in one stage instead of all production stages and that it is a share of production rather than in cash is a feature that distinguishes the general service share from added value.
In industrial production, the general service share is taken at the rate of 1/5, provided that it is only in one phase of production. This ratio can be reduced to 1/10 or even 1/20. It is even possible to reduce this ratio to 1/40 for industrial products such as salt and fertilizer, whose sources are sea water and air. However, it may be possible to collect a general service share in a second stage from those who manufacture substances reduced to 1/40.
The loan to be given to industrial enterprises will be in the form of bill of goods and the general service shares paid in the past five years will be taken as basis in determining the loan amount. Thus, the general service shares paid in previous years are later returned in the form of loans.
C - Agricultural Loans
The general service shares to be received from agricultural enterprises should be half of the share received from industrial enterprises. Because, although the primary material is used and consumed in industrial enterprises, it is soil used in agricultural enterprises and the soil is not depleted. For this reason, the community share in industrial enterprises is increasing compared to agricultural enterprises.
Although the general service shares to be received from agricultural enterprises are essentially 1/10, it may decrease to 1/20 in infertile lands, and may increase to 1/5 in lands where infrastructure services are provided at a high level.
General service shares to be paid by agricultural enterprises will be used in the creation of agricultural sites, especially residential sites, and the infrastructure and common services of these sites will be covered by the foundation. The lands will be parceled (ikta') and the parcels will be transferred to private ownership, but each parcel will give a portion of the crop it produces as a general service share, in the above-mentioned rates. General service shares:
a-The agricultural site, its infrastructure, basic services such as water, electricity, roads and warehouses,
b- It will be used in the supply of production tools such as fertilizer, agricultural tools and equipment, and medicine.
Agricultural enterprise owners will benefit from these infrastructure services and will also be able to use loans based on the general service shares they have paid in previous years. Thus, collective production will be realized while protecting private property. The declaration of the entrepreneurs will be taken as basis in the payment of general service shares (18).
Credit to agricultural enterprises will be given as ten times the tax paid in the previous ten years. Essentially, this amount is the equivalent of one year's revenue and was paid during the last ten years. Correct declarations of the enterprises will guarantee the next year's loan, while false declarations will affect the loan remuneration amounts.
The loans will be given to the zurra in the form of salam, and the zurra will receive the loan with the promissory note of the crop they want to plant and convert it into cash by selling it in the stock market. After completing his production, he will pay off his loan by taking his product to the office and delivering it.
Certain credit values can be determined among agricultural products. Thus, determining which products should be grown in the coming years can be encouraged by the operation of the credit mechanism, and production planning can be realized automatically. Just like industrial loans, loans given to agricultural enterprises may also affect other sectors by reflection. Since other agricultural inputs such as seeds and fertilizers will be purchased in cash or even by ordering in advance with the loans provided, the companies selling them will also indirectly benefit from the loans.
will be benefited. In this way, the credit will be given to the villagers who are the real producers. Nowadays, credit is given to the merchant instead of the peasant, and the merchant gives second-hand credit to the peasant, and the peasant is forced to give his product to the merchant at a very low cost in order to pay off his loan. In other words, giving credit to merchants results in the emergence of a master merchant class.
Those who will engage in industrial production using agricultural products will be exempt from taxes, but they will not be given credit. However, some industrial enterprises may be exempt from this. For example, instead of a loan being given to cotton producers, if this loan is given to yarn factories, cotton production will be regulated through a credit mechanism on a macro and micro level, as the factories will finance the cotton producers. Since such a practice could possibly lead to the formation of some kind of exploitation system, there are great benefits in doing this with the salam bill. In other words, the spinning mills will encourage and force the descendants to buy cotton bread by purchasing the salam bonds held by the descendants in advance. Essentially, salam bonds will be able to automatically plan production.
D - Commercial Loans
The credit institution should generally be used to mobilize labor. The trading sector is an intermediary sector in the economy, and the trader is an intermediary. Therefore, instead of granting loans directly to merchants, it will be essential to give them loans in proportion to their deposits, as we stated in the loan accrual criteria.
In crediting, where the maximum credit limit will be considered equal to the maximum deposit limit, general service share will be accrued based on the capital declaration and the loan amount will be determined accordingly. The merchant who takes a loan will also have the opportunity to sell on credit, and the bank will be a guarantor for the goods sold with a credit limit.
Another type of loan among merchant loans is the loan given to money changers. As it is known, stock exchanges where stocks and bonds are bought and sold have been established in developed countries. Stock exchanges have become the most important institutions of the capital market. Dynamism in the economy can be ensured by the active stock exchanges where securities are bought and sold. Producers have the opportunity to exchange the goods they produce with commodity bills in the stock exchanges without bargaining. In other words, the exchange of securities is substituted for the transaction of goods in the stock exchanges.
In order for the bills to be issued in a planned manner and used in lending, they must be able to perform their functions, that is, they must be bought and sold in the market. This function can only be provided through stock exchanges. Realization of such an exchange is possible with the support of the bank. This support will be in the form of giving loans to those who buy and sell the securities. The trader who trades in the stock market will take the bills in his hand to the bank and give them as collateral and receive cash in return.
This application will accelerate the credit operation in the stock exchanges, and perhaps the bank's most voluminous value transaction may occur in the stock exchanges. However, the credit given to money changers who will trade in the stock exchanges will be based on their capital declarations. General service fees will also be deducted from them according to their declarations.
As can be understood from these general explanations, the loans to be given by the bank will be either in return for deposits or in return for general service shares paid in previous years. Problems that will arise in practice will be tried to be solved by taking these two principles into consideration.
V - CREDIT INSTITUTIONS SHOULD BE ORGANIZED AS FOUNDATIONS
Credit is a state business. Necessary information on this subject was given in the previous sections. Credit is a guarantee institution and the one who gives this guarantee is the state. Because giving assurance requires authority, and the authority belongs to the state and the state is the only center of authority.
The duty to exercise state rights is sometimes given to governments. When governments use these powers, they activate the budget institution. There are such rights belonging to the state that the way of disposing of them has been determined beforehand and the administrators are only obliged to fulfill these determined transactions. Governments do not have the authority to decide freely on these tasks. We generally call these organizations foundations.
Furthermore, individuals have rights in loans as well as community rights. Just as walking on a road, entering a temple, doing business in a market, and releasing animals to pasture are among the rights of an individual within a community, depositing trusts in the Baytulmal and being able to borrow money from the Baytulmal are also among the rights of individuals. Giving discretion to administrators in such state duties that concern individuals will lead to injustice and corruption of administration.
Establishing an interest-free bank essentially means establishing a credit mechanism in accordance with economic requirements, modesty of social rights and justice. Even if the deposits are interest-free, if they can be channeled to one side at the discretion of the managers, the results will not be different from the results of a bank operating with an interest-based system. Because the biggest harm of interest is that it creates a monopoly, and by collecting deposits, banks establish a monopoly in the first place.
Since the loan is a state guarantee and concerns the authority of the state, granting a loan by a private person or a private bank will mean sharing the sovereign rights of the state, which may lead to both a vacuum of authority and the formation of new centers of authority.
How should this right belonging to the state be used? Will private individuals and private banks or the state itself exercise this right?
The most appropriate solution in this regard would be for banks to be organized as foundations and loans to be given to beneficiaries within the principles previously stated in the foundation deed, without giving discretion to managers in loan distribution. In the bank model we are focusing on, the bank will serve as a foundation.
FOOTNOTES:
*-writer- was born in Ödemiş in 1951. He completed his primary education in Ödemiş and his secondary and higher education in İzmir. He graduated from Ege University Faculty of Economics in 1973 and Izmir High Islamic Institute in 1975.
Sabri Tekir, who completed his master's degree in 1976, worked as an inspector at the Ministry of Labor for a while and then started working as an assistant at the Ege University Faculty of Economics. In 1978, he submitted his doctoral thesis to Dr. received the title.
He currently works as a lecturer and Deputy Head of the Department of Finance at Dokuz Eylül University, Faculty of Economics and Administrative Sciences.
Yard. Assoc. Dr. Sabri Tekir is married and has two children.
1-Vural SAVAŞ, Economic Analysis. Ist 1974, p. 339
2-Vural SAVAŞ, Development Economics, Istanbul. 1974, p. 65.
3-Robert R. HEİLBRONER, İktisadî Sorun H Makro İktisat. (Ç. Demir De-mirgil) İst. 1974, s. 221.
4-Süleyman KARAGÜLLE, Interest-Free Bank. s. 13-115.
5-JM Keynes also has the same opinion. For detailed information, see Sabri Tekir, Introduction to Public Finance. Izmir, 1984.
6-Erdoğan ALKİN, Economics, p. 227, Ak Economics Encyclopedia, CI, p. 562.
7-Süleyman KARAGÜLLE, ibid., p. 13.
8-I. BYKP, 1963-67, s. 113.
9- İsmail TÜRK, Fiscal Policy, Ank. 1969, p. 191.
10- Ak Economics Encyclopedia, C. I., p. 562.
11- Süleyman KARAGÜLLE, ibid., p. 14, 17, 111. 112.
12- Süleyman KARAGÜLLE, ibid., p. 17.
13-In our country, private banks do not provide construction loans according to the principle agreement they make among themselves. However, it is known that the construction sector plays an important role in revitalizing the economy during the recession. It ensures the continuation of production in many sectors of the economy with the large number of finished and semi-finished products it uses as input, thus creating a wide area of employment.
14- Süleyman KARAGÜLLE, ibid., p. 111.
15- Süleyman KARAGÜLLE, ibid., p. 112
16- Süleyman KARAGÜLLE, ibid., p. 112
17- Süleyman KARAGÜLLE, ibid., p. 113
18- Süleyman KARAGÜLLE, ibid., p. 115