摘要：The paper aims to examine whether MalaysianIslamic banks carry out income smoothing withregards to their distribution of depositors’ return.The paper also examines the extent MalaysianIslamic banks engage earnings and capitalmanagement in their distribution of depositors’return. This empirical study uses balanced paneldata from 16 Malaysian Islamic banks, for theperiod 2008-2012. The regression model isestimated using random effects specifications.The findings indicate that the earnings beforetax, zakat, and provision have a positive butinsignificant effect on distribution of depositors’return (DDR) whilst the total capital beforeprovision has a positive and significant effecton the DDR. These findings suggest thatIslamic banks carry out income smoothing onthe distribution of depositors’ return via capitalmanagement. Islamic banks also smooth theirearnings through distribution of depositors’return to avoid earnings troughs when earningsare poor. The findings shows prudence exerciseamong Malaysian Islamic banks with theobjectives of mitigating displaced commercialrisk (DCR), which involves massive withdrawaland bank runs risks.
