Review the theoretical relationship between market structure and bank performance - Coursework Example

The relationship between the structure of the market and performance of the bank exists due to various reasons. For instance, there is the advice that company executives (specifically, the chief executive officers) acquaint the government and bank officials. Such advice is vital for establishing better pricing strategies and focusing on the income within a certain period. It is vital for the Chief Executive Officer’s undertake their usual duties considering the relation established between the market and performance of the bank.

The main concern of this paper is to portray the relationship between the market structure and bank performance. Theoretical relationship between market structure and bank performance Market structure is a commonly used marketing term that gives a description of the level of competition that various business organizations lie under. There are two named variables of the market structure responsible for ascertaining a good relation between banks and market structures. To begin with, there is market awareness, used when measuring the assets of the banks in relation to the liabilities (Gelos & Roldos 2004, p. 41). They help ensure that the liabilities do not outweigh the assets.

This is significant as it helps maintain the profits and financial statement of the banks. Market share is the second variable and acts as an element measuring the deposit of banks within certain periods. The performance of the bank brings about accomplishing banking activities, which are necessary especially when bank executives aim at creating better relations with the outside market. Since long time, people have had the urge to acquire more knowledge on operating business entities. They have also had concerns about the relationship between their businesses and the government.

This is evident through the collapse of the privatised banks in Mexico (Graf 2013, p. 165). Top most leaders in any business industry should aim at ensuring that their businesses operate smoothly without much loss on the finance department. This is necessary in enhancing the relationship between them and banks. This is due the fact that hindering losses denotes a business operating in a situation where the activities generate more profits, necessary to be deposited in the banks. Individuals dealing with banking operations need to evaluate the performance of the activities undertaken within and outside the bank.

Scrutiny of the external and internal banking factors is necessary. This is because it enables executive employees of a particular bank to acquire vital knowledge about overall bank performance. The relationship may also exist through an assessment the operations of business industries. This is crucial especially in a case where the executives demand to know what other businesses contribute to the banking sector. Effects of market structures on bank performance The existence of a good relationship between market structure and banks is an essential element in setting strategies for dealing with the action involving the setting of prices.

The relationship has resulted in positive effects on banks. For instance, well-established market structures play the role of increasing finance due to the reason that the individuals operate through to accomplish set objectives. This then leads to an increase in bank finance as the business partners have to increase general savings. The reason why banks opt to relate to