This series presents an analysis of the macroeconomic and institutional developments in ESCWA member countries, with a view to identifying the key barriers to sustainable and equitable development in the region. Issue No. 3 provides a comprehensive analysis of developments in the banking sector in the past two decades. The study is based on a stochastic frontier analysis model, and considers the risk factors generated by lack of efficiency of the banking sector. It also examines the relationship between financial sector developments and economic growth.