One of the arguments for the underrepresentation of Muslim-owned banks in the Islamicate world before 1900 is the prevalence of inert capital tied up in pious endowments (waqf/awqaf). To highlight the waqf’s function as both expedient and encumberance, this paper examines the interactions between Muslim pious endowments and local formal banks in the Ottoman Empire between 1850 and 1890. Contrary to the picture of uniform waqf stagnation, Muslim entrepreneurs in all three contexts relied on endowments to reduce transactions costs and enter competitively into the market, and many of the most prosperous Muslim merchant communities owed their initial success to the support of these institutions. Still, with full recognition of the legal restraints applied to utilizing waqf assets for purposes other than those outlined in their charters, many Muslim entrepreneurs tried to link their endowments to the financial/insurance services and interest-bearing capital supplied by banks. They did so because they recognized that waqf alone could not meet all of their institutional needs in a rapidly changing regional economy. Although this was nominally a violation of the stipulations of many waqf deeds, entrepreneurs attempted, with inconsistent success thanks to legal obstacles, to fuse endowments to non-Muslim banks to offset the persistent problem of inadequate access to credit. Curiously, however, the interlinking of endowments and banks did not lead to the formation of Muslim banks before 1900. That only occurred after the creation of national level waqf committees which supported the growth of Muslim formal banking institutions as an official policy. Through its transregional emphasis, this paper makes an important intervention in Ottoman economic history by examining the extent to which Ottoman endowments interacted with newly founded banking institutions, the obstacles to further integration, and how these developments compare to Muslim economic histories in colonial settings. Unlike other Muslim environments outside the empire, in the Ottoman context the Ministry of Imperial Awqaf did not assume the function of a bank and facilitate the centralization of endowment capital, nor did Ottoman legal rulings and handbooks allow banks to assume control over endowments. Ultimately, this paper demonstrates that waqf-formal banking interactions in the period 1850-1890 had economic consequences for Muslim banking into the next century both in the Ottoman Empire and outside it.