Journal of Finance and Bank Management June 2015, Vol. 3, No. 1, pp. 47-55 ISSN: 2333-6064 (Print), 2333-6072 (Online) Copyright © The Author(s). All Rights Reserved. Published by American Research Institute for Policy Development DOI: 10.15640/jfbm.v3n1a5 URL: http://dx.doi.org/10.15640/jfbm.v3n1a5 Scrutinizing E fficiencies of Participation Banks: Turkey Sample 2005-2013 Assistant Professor Dr. Pınar Pehlivan 1 Abstract Today, efficient operation of the banking sector that support the growth and development of the countries has significance in terms of optimal using of resources. In our country, efficiency and productivity has become more important in the restructuring of the banking sector, especially after the Turkish banking crisis in November 2000 and February 2001. An important part of the banking sector is participation banks that apply interest-free banking. This institutions working in the private financial institutions previously have been converted into participation banks after the law numbered 5411 was invoked. While, there are a lot of studies about efficiency and productivity for the deposit banks and development and investment banks, not many studies examining participant banks effectiveness. Several kinds of methods are used in measuring efficiency of banks. Data E nvelopment Analysis (DE A), that uses several input and output is a very suitable method to measure efficiency in banking sector. Besides, offering set of references leading to managers on efficiency and productivity of inefficient banks, it is one of the most important specialities of DE A method. The aim of this study is to measure efficiencies of participation banks in Turkish banking sector by using DE A for 2005-2013 period. In this study, it is concluded that all of the participation banks are efficective in 2005-2008 and 2012, but not effective in 2009-2011and 2013. Keywords: E fficiency, Productivity, Participation Banks, Data E nvelopment Analysis Introductıon Participation banks are institutions that work in principle of interest free banking. These banks transmit the inactive or non economic funds of investors having interest sensivitity. Participation banks are one of three elements of banking sector with deposit banks and development and invesment banks andone of the most developing sectors. Most notable function of participation banking is bringing both the savings of investors having sensitivity to interest and inactive funds to economy. Participation banks directly embody the funds they collect from savers or international markets to real economy. Thus, participation banksare institutions that fund the production, investment, employment and exportation. E fficiency and productivity are significant concepts for participation banks as they are for all sectors. Participation banks should analyse the performance of their competitions and scrutinize their reference banks so as to work efficiently and productively. E fficiency and productivity analyses are significant to determine with which inputs the results are obtained and clarify their conditions. In this scope, total 2005- 2013 activities of four participation banks operating in our country are analysed via VZA method and with three inputs and two outputs.In the first part of the study development of participation banks in Turkey is indicated and literature is expressed in the second part of the study. The content of the study is indicated in the third part by expressing the variables of input and output and findings are assessed and conclusions are indicated in the final part. 1 Celal Bayar University, Manisa / Turkey. E mail: pinarpehlivan1974@ yahoo.com, pinar.pehlivan@ cbu.edu.tr