Title: The relationship between Islamic banking deposits and profitability: an evidence from Malaysia Islamic banks

Authors: Roukia Bouhider

Addresses: Laboratory of Economy of Organisations and Sustainable Development, University of Jijel, Algeria

Abstract: The main objective of this paper is to analyse the relationship between the deposits and the profitability of 14 Malaysian Islamic banks over the 2006-2018 period by employing fixed effects panel data. The main independent variable is the deposits to assets ratio, and the return on assets (ROAs) is the main profitability measure. The findings of this study have reported a strong positive relationship between the bank deposits to assets ratio and profitability. The study recommended that Islamic banks in Malaysia embark on a serious effort to develop their own instruments to mobilise deposits and to use them in order to foster economic and social development, which would increase their future profitability and reduce their costs.

Keywords: Islamic banks; current deposits; saving deposits; Al-Wadiah; deposits; Al-Mudarabah; profit-sharing investment accounts; PSIA; panel data; profitability; Malaysia.

DOI: 10.1504/IJEPEE.2025.147476

International Journal of Economic Policy in Emerging Economies, 2025 Vol.22 No.1, pp.52 - 73

Accepted: 29 Oct 2021
Published online: 18 Jul 2025 *

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