Pricing the Equity-Based Financing of Mudharabah: Insights into its Drivers Nazhatul Majalis Faculty of Economics and Business, Universitas Syiah Kuala nmajalis@gmail.com Ratna Mulyany * Faculty of Economics and Business, Universitas Syiah Kuala Corresponding author: ummuhaziq@unsyiah.ac.id Zata Hulwani Zuhri Faculty of Economics and Business, Universitas Syiah Kuala zata.zuhri@mhs.unsyiah.ac.id Abstract This study investigates the factors that infuence the pricing of mudharabah fnancing as ofered by Islamic Banks in Indonesia. Specifcally, it examines whether the operational cost to operating income (BOPO), risk factor and spread signifcantly infuences the pricing of mudharabah fnancing. This study uses a quantitative method based on secondary data derived from the Islamic banks’ fnancial statements for the period of 2014-2018. Purposive sampling is utilized, with the total 9 Islamic Commercial Banks being the samples that meet the criteria, resulting in 45 units of analysis for fve years observation. This study uncovers that all of the three independent variables afect the dependent variable simultaneously. From the partial results, only two variables that afect the pricing of mudharabah fnancing, i.e. risk factors and spread. Meanwhile BOPO was found to have no association with the pricing of mudharabah fnancing. This study implies that pricing of mudharabah fnancing may be largely dependent on the risk factors and spread rather than the consideration on the operational cost to the operational income. Keywords: Operating Expenses to Operating Income (BOPO), Risk Factor, Spread, Mudharabah Financing, Islamic banking. INTRODUCTION Equity-based fnancing through proft-sharing mechanisms as inherent in Islamic fnancing products like mudharabah has been believed to be the genuine fnancing alternative in Islamic economics as compared to the forbidden interest-based fnancing products (El-din, 2008; Khan & Mirakhor, 1987; Usmani, 1998). In Islamic Finance, the alternative fnancing IQTISHADIA Vol. 14 (2) 2021 PP. 219 - 234 P-ISSN: 1979 - 0724 E-ISSN: 2502 - 3993 DOI : 10.21043/iqtishadia.v14i2.9204 219 IQTISHADIA 14,2