Abstract A detailed review of existing literature on the structure-conduct- performance (SCP) relationship indicates that the empirical divergence between SCP and competing hypothesis is still not conclusive which is attracting many research works across the world, and recently in Africa. Studies on SCP are dominated by quantitative analysis with exclusion of non-quantifiable variables such as related to conduct and/or those lack data (regulation). The majority of studies employ a multiple linear regression model where a measure of bank performance (mostly profit) is regressed on market concentration variables (such as k-firm, Herfindahl- Hirschman Index, etc.) along with some control variables. Studies that used the structure model have limited focus on other key variables like regulation, macroeconomic, and industry factors. They have also applied a quantitative approach and assumed conduct as being a derivative of the market structure. Hence, there was no attempt to explore the behavior of banks within the given structure, banking, and macro environment. Few studies have explicitly considered Ethiopia’s banking performance using the structural approach (SCP or ESH). Nevertheless, the existing bank performance studies were not analyzed incorporating big banks in the industry, with long period observation of banks, using parametric and non-parametric methods, which are scarce in the Ethiopian context. Keywords: Structure, Conduct, Performance, Bank, Ethiopia Empirical Evidences on Structure-Conduct- Performance Relationship in Banking Sector: A Literature Review Tesfaye Boru Lelissa*, Abdurezak Mohammed Kuhil** Introducton The structure-conduct-performance (SCP) framework, which originated from the works of Mason (1939) and Bain (1951) as a method of analyzing industry concentration, * PhD Candidate, UNISA, Vice President, Debub Global Bank S.C., Ethiopia. Email: teskgbl@gmail.com ** PhD, Assistant Professor of Business Leadership, School of Commerce, College of Business and Economics, Addis Ababa University, Ethiopia. Email: abdurazak.mohammed@aau.edu.et has made its focus in the manufacturing sector (Sathye, 2005). It was later (in 1961) introduced into the banking industry following the work of (Schweiger and Mcgee; Atemnken and Joseph, 1999). It has therefore remained as a commonly used model to test the casual link between industry concentration and bank performance (Berger and Hannan, 1998). Consequently, several studies intended to explore the link between market power, effciency and performance of banks were conducted in several countries (Claeys and Vennet, 2008, Deltuvaite et. al. 2007, Flamini et. al, 2009, to mention but only a few). In other words, the studies focus mainly relied on testing the validity of the basic proposition of the traditional SCP paradigm that the industry concentration lowers the cost of collusion between frms and results in higher than normal profts. The communalities among the studies tend to encircle around testing the two contrasting market paradigms, the SCP and the effcient market hypothesis. The two competing views are based on the concept of market power, structure conduct, performance and relative market power (RMP) on one hand, and effciency-based explanations on the other (Chortareas, 2009). The market power hypotheses are based on the premise that banks with a higher market share might earn superior profts due to their market power (Shepherd, 1986). A disintegration of concepts has also been observed in the effcient structure proposition. The relative X-effciency (ESX) hypothesis states that more X-effcient banks (due to better management or better technology) have lower costs of operation, higher profts and bigger market shares which may result in greater concentration (Demsetz, 1998). Therefore, banks operating at optimal economies of scale will better reduce their unit costs which result in higher unit profts. This International Journal of Financial Management 8 (2) 2018, 11-25 http://publishingindia.com/ijfm/