Ottoman cash waqfs as early non-bank financial institutions: balance-sheet evidence and implications for financial inclusion

Purpose The purpose of this study is to empirically examine the financial structure, legal foundations and social role of Ottoman cash waqfs using a rare fully audited ledger from Kocaeli (1872). Moving beyond the predominantly normative and jurisprudential orientation of the existing literature, this study offers evidence-based insights into how these institutions operated as community-based financial intermediaries, mobilized endowed capital through Sharia-compliant mechanisms such as istiglal and broadened access to finance in local communities. Design/methodology/approach The analysis uses a streamlined mixed-methods framework that combines qualitative institutional assessments with transparent, descriptive quantitative tools. The audited ledger was examined using historical accounting methods and analyzed using descriptive statistics, concentration measures (Gini coefficients and Lorenz curves) and correlation analysis to assess the distributions of capital, financial sustainability and borrower characteristics. All techniques were selected to match the structure and limitations of the historical data. Findings The audited ledger records 39 cash waqfs administering a combined principal of 1,093,620 gurus. More than 97% of this capital was allocated through Sharia-compliant istiglal contracts, which generated returns in the range of 10%–20%. The distribution of credit reveals a wide socioeconomic and cross-communal outreach: peasants constituted the largest category of borrowers (41%), followed by artisans and traders (26%). Although larger mosque waqfs controlled the bulk of the total capital, smaller neighborhood waqfs exhibited markedly higher lending efficiency. The resulting surpluses were systematically reinvested in educational, infrastructural and welfare-oriented initiatives. Practical implications The operational features of Ottoman cash waqfs reflect principles that are central to contemporary Islamic microfinance and ethical finance, including local resource mobilization, risk sharing, community-based governance and the integration of financial activity with social welfare provision. These historical insights offer meaningful design implications for modern Islamic microfinance institutions, waqf-based social investment frameworks and community-oriented fintech initiatives. Originality/value Empirical studies that reconstruct the financial operations of Ottoman cash waqfs remain scarce. Most existing research relies on foundation deeds or court records rather than audited financial data. By analyzing a fully audited ledger, this study provides rare quantitative evidence on operational performance, capital allocation and socioeconomic outreach. It thereby offers a more robust empirical assessment of historical Islamic financial institutions and contributes new insights to both Ottoman economic history and modern Islamic finance literature.