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Arab countries like other developing countries have embarkedsince the early 1990s on financial sector reforms. The purpose of this study isto review and analyze the financial reform experience of the Arab countriesafter more than ten year of the implementation of these reforms.
Financial reforms have already brought aboutsignificant improvement in monetary and credit aggregates in many Arabcountries. Financial sector reform has certainly had a noticeable impact on thecost of intermediation: real interest rates and gross interest margins.However, there is scope for even more improvements over the next years ascompetition enhancing measures and administrative costs reduction interventionsare adopted. Moreover, the financial sector in Arab countries caters mainly tothe public sector. There is a need for the monetary authorities to strengthenand promote private sector activities and ensure that the public sector doesnot crowd it out. Furthermore, Arab capital markets remain relatively small andface various constraints