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Explain the Structure-Conduct-Performance paradigm in Banking and the implications of the Efficient Structure Hypothesis and Relative Market Power Hypothesis for empirical studies of the structure and performance of banking markets - Essay Example

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This research paper attempted to study and explain the SCP in banking by discussing some of the available literature on the subject besides analyzing the possibility of…
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Explain the Structure-Conduct-Performance paradigm in Banking and the implications of the Efficient Structure Hypothesis and Relative Market Power Hypothesis for empirical studies of the structure and performance of banking markets
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"Explain the Structure-Conduct-Performance paradigm in Banking and the implications of the Efficient Structure Hypothesis and Relative Market Power Hypothesis for empirical studies of the structure and performance of banking markets"

Download file to see previous pages stry as the empirical studies conducted across the different geographical locations suggest that the despite structural changes into the banking industry, they are still competitive and hardly engage into collusive behavior.
Banks tend to perform various tasks and roles within an economy and as such are considered as one of the most important pillars of an economy. The supply of credit to the borrowers and lenders is the basic function which a bank performs besides taking deposits. However; the nature and scope of the industry have broadened over the period of time. The recent crisis in the banking industry indicates to the extent of severity of the failure of financial system can be as it has the potential to impact the whole economy of a country. The severity and mass scale failure of banks to perform in relatively volatile market environment indicate how the overall performance of banks is worsening over the period of time.
Numerous studies have been conducted in order assess the performance of the banking industry and its relationship with the market structure. These studies have divided or segregated the bank performance into different categories such as bank loan and deposit rates, profit rates of the bank etc. The structure- conduct paradigm is the major theoretical attempt to define the behavior of banks within a competitive environment. Though the Structure conduct paradigm or SCP as it is mostly called is an extension of industrial economics. However, it has been extensively used in banking industry to study the paradigm within the specific characteristics of the banking industry.
This research paper will study and analyze the structure conduct paradigm in banking and would further discuss how efficient market hypothesis and relative market power hypothesis can have different implications for empirical studies to be conducted of the structure and conduct of the banking sector.
Over the period of time, the banking industry has increased in the scope as ...Download file to see next pagesRead More
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