Aim/purpose – The main purpose of the study is to investigate the bank-specific factors that influence the net interest margin of banks in Palestine. Design/methodology/approach – An econometric model using random effect panel regression was used to estimate data for all 17 working banks from 2006 to 2016. Findings – Result indicates that several factors, including credit risk, risk aversion, bank orientation, and foreign banks, have statistically significant effects on the net interest margin. However, results also show that such factors as operating expenses, management efficiency, Islamic bank, and time trend are not statistically significant. Research implications/limitations – The main policy lesson drawn from this study is that the net interest margin of working banks in Palestine could be further enhanced by formulating regulatory policies regarding bank-specific factors, such as credit risk, risk aversion, bank orientation, and foreign banks. The most significant limitation of the study was the availability of data. Despite the fact that several bank-specific factors were identified in the literature as a determinant of the net interest margin, only the factors that have an available data were used in the study. Originality/value/contribution – The results of research introduced in the study make theoretical and practical contributions to the body of knowledge. It fills the gap related to the bank-specific factors that influence the net interest margin of banks in Palestine, which have specific conditions and atypical situation.