<p>This article examines the impact of regulatory capital and ownership on the bank’s interest margin. Bank interest margins have drawn renewed scholarly and policy attention in the wake of COVID-19 and, earlier, the global financial crisis. To achieve the study’s aims, two regression approaches were employed: the system generalized method of moments (GMM) and pooled ordinary least squares (OLS). The authors evaluated the hypothesis using data from 32 Bangladeshi commercial banks spanning 24 years (2000–2023). The findings from this robust study indicated that tighter regulatory capital requirements compress bank interest margins. Ownership also matters: Islamic banks exhibit markedly lower margins than comparable conventional banks. The COVID-19 shock appears stronger than pre-pandemic dynamics, while margins widened during the global financial crisis. The results remain valid after employing several estimation techniques and alternative proxies. Moreover, the results remained robust when controlling for bank-level, industry-level, and macroeconomic-level variables. The findings provide enhanced guidance for bank regulators, scholars, and policymakers on how to capitalize on the reduced bank interest margins resulting from the imposition of higher regulatory restrictions.</p>