This thesis examines the structure-conduct-performance hypothesis in six GCC banking markets, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates between 1995 and 1999. Following Berger (1995) we distinguish among the four hypotheses (the two market power (MT) hypotheses (traditional SCP, and RAP) and the two efficient-structure hypotheses (X-efficiency and Scale-efficiency)) by incorporating into our performance models direct measures of X-efficiency and scale-efficiency. This provides more definitive results because the model specification can incorporate the reduced forms for all four hypotheses, and tests of the four hypotheses were performed by regressing measures of concentration, market share, X-efficiency and scale-efficiency against profitability (ROE, ROA and Alternative profit efficiency (APX)). Our empirical findings strongly support the X-efficiency version of the efficient -structure hypotheses that cost X- efficiency helps in explaining the variability of bank profits. X-efficiency or superior management of resources is consistently associated with higher profits when controlling for the effects of the other three hypotheses. These findings indicate that; firstly, there is no evidence that market concentration enables banks to earn higher profits due to collusion. Secondly, market share appears to reflect bank's efficiency and not relative market power. The most important implications of these findings for GCC's policyrnakers, is that, they should not be widely concerned about increasing concentration levels in banking markets from a competition standpoint.