The Impact of Income Smoothing on Bank Performance: An Islamic Perspective on Listed Banks in Indonesia (2014-2018)

This study investigates the effect of income smoothing practices, bank ownership structure, leverage, and company size on bank performance in Indonesia from an Islamic perspective.Drawing on agency theory and construction theory, the authors employ a multiple regression model to analyze data from 21 listed banks on the Indonesia Stock Exchange from 2014 to 2018.The findings reveal that income smoothing practices have a negative effect on bank performance, as measured by return on assets (ROA), while company size has a positive effect.Leverage also has a negative effect on ROA, but bank ownership structure does not have a significant effect.The study contributes to the literature by providing empirical evidence on the interplay between income smoothing, Islamic principles, and bank performance in the context of Indonesian banks.The findings have important implications for bank managers, regulators, and investors seeking to promote transparency, honesty, and stability in the banking sector.The authors discuss the limitations of the study and provide suggestions for future research.