Nor F.M.Shaharuddin A.Marzuki A.Nawai N.Zainuddin W.Z.2024-05-282024-05-282017207046582-s2.0-85034651171https://www.scopus.com/inward/record.uri?eid=2-s2.0-85034651171&partnerID=40&md5=ac80512ed1ef1f4c2824df884b8f5516http://ibtra.com/pdf/journal/v13_n2_article2.pdfhttps://oarep.usim.edu.my/handle/123456789/8803This paper investigates the quantitative and qualitative approaches of bank pricing determinants practised by the Islamic banking industry in Malaysia. On the quantitative approach, this paper investigates the effects of bank characteristics on bank profit margin, which reflects the intermediary role of Islamic and conventional banks in Malaysia for the period of 2006 to 2014. For Islamic banks, bank size and liquidity ratio have a significant negative relationship with bank profit margin. The management efficiency (vis-a-vis cost to income) and default risk are positively related to bank income margin for Islamic banks. As for conventional banks, besides management efficiency, the non-interest to total asset ratio has a significant positive influence on bank profit margin. Therefore, the results show that there are similarities and differences in terms of determinants of the Islamic and conventional banks. These empirical results suggest an important policy on issues pertaining to how Islamic and conventional banks have to adjust to the changes in the banking environment in terms of performance and its comparative advantages, specifically on management efficiency, as both Islamic and conventional banks' performance are affected by it. The management efficiency has more impact on the conventional banks than Islamic banks. For the qualitative approach, the key determinants and pricing approaches were extracted using the verbal protocol. The verbal protocol was followed by in-probing of respondents. Interviews were conducted with Islamic banking experts from Bank Muamalat Malaysia Berhad, CIMB Islamic Bank Berhad, Maybank Islamic Berhad, dan Bank Islam Malaysia Berhad. The analyses suggest some distinct outcomes and results in identifying the determinants and practices of pricing and bank margin for future research. This study provides important insights for Islamic banks to improve their bank margin and profit by considering the significant variables affecting their bank profit margin. Generally, the themes that emerged from the interviews are parallel with findings from the literature. However, the determinants of the pricing that have not been captured by the literature are marketing strategies, which include product risk and financing terms and conditions, and discretionary power. The awareness of Islamic banking products and cost of fund strategy are other important determinants of bank margin and profitability. This research also has the potential to enrich bank margin determinants' concept, theory, and practice.en-USBank profit marginConventional bank performanceIslamic bank performanceQualitative analysisQuantitative analysisArticle1548132