One of the countries, which has seen a recent expansion of Islamic finance (also known as participation finance) is Turkey. In a recent paper with Steven Ongena and Ilkay, Sendeniz-Yuncu we explore the importance of distance between borrower and branches of different bank types for establishing relationship between banks and borrowers. Extant evidence across
developed and developing countries has shown that geographic proximity is important for relationships between (especially small) firms and their banks. In the case of Turkey, the average distance between the firm and the closest branch of the bank it
has a relationship with, is 1.7 km, though with substantial variation. We find that the probability for a firm to connect to a bank substantially decreases in distance, but that if the bank in the vicinity is an Islamic bank, distance plays a more muted
role, especially in cities in the Mediterranean and Aegean regions, as well as in cities with a high conservative party vote and higher trust in religious institutions. This suggests that Islamic financial products are sufficiently attractive for
certain borrowers that they are willing to take into account longer distances to access these banking products.