This thesis examines the cost and alternative profit efficiency of a sample of Algerian, Moroccan and Tunisian banks over the financial liberalisation period 1994-2001. The translog functional form and intermediation approach are employed in this study to derive inefficiency estimates as well as scale economies levels and scale inefficiencies estimates. The results show that inefficiencies are substantial in the three banking systems under study, with an average of 29% of cost inefficiency and 32% of alternative profit inefficiency. Scale economies and scale inefficiencies are also found to be not negligible at an average level of 46% and 9%, respectively, with a negative relationship between assets size class and scale economies and scale inefficiencies estimates. The analysis also principally reveals that; first, Moroccan and Tunisian banks are more cost efficient than their counterparts in Algeria, secondly, banks that are involved in traditional income-generating activities are more profit efficient that other banks, and thirdly, banking firms with mixed structures of ownership (a combination of private, public and foreign), or listed, are more cost and profit efficient than their counterparts with a single type of ownership. We suggest that the three types of ownership may combine so as to reduce various inefficiencies associated with single ownership types. For example, foreign ownership might bring new technology and updated systems of risk management, the private sector emphasises the profitability motive and lending to more profitable sectors, whereas government ownership brings experience and knowledge in the domestic market. These factors combined seem to result in a more efficient bank operating units than those that have sole ownership features. As our results seem to be very sensitive to the data used in this study, we can conclude that the cost and profit inefficiencies, and the substantial level of potential gains from scale economies that appear to prevail in North African banking, we argue, are likely to reflect the still limited presence of competitive pressures in the banking systems under study. We conclude that inefficient banks in North African countries (Algeria, Morocco and Tunisia) continue to exist because they have been (or still) protected, especially as we know that the largest banks are typically State-owned or have major state shareholders.