Comparative analysis of banking sector consolidation trends and their impact on market competition

Posted: Oct 28, 2025

• Dr. Laura Laurent
• Dr. Layla Tanaka
• Dr. Layla Zhang

Abstract

The global banking sector has undergone significant structural transformation through consolidation activities over the past two decades, presenting complex implications for market competition dynamics. This research examines the multifaceted relationship between banking consolidation trends and competitive outcomes across diverse economic contexts. Traditional approaches to analyzing banking competition have primarily relied on concentration ratios and profitability metrics, yet these methods often fail to capture the nuanced effects of consolidation in contemporary financial markets. Our study addresses this gap by developing an integrated analytical framework that combines conventional competition metrics with innovative network analysis and predictive modeling techniques. The consolidation phenomenon in banking represents a strategic response to various market forces, including technological disruption, regulatory changes, and globalization pressures. While consolidation can generate operational efficiencies and scale advantages, concerns persist regarding its potential to diminish competitive intensity and consumer welfare. Previous research has yielded conflicting findings on this relationship, with some studies suggesting that consolidation enhances competition through efficiency gains, while others indicate negative effects on market contestability. This ambiguity underscores the need for a more sophisticated analytical approach that accounts for regional variations, institutional factors, and temporal dynamics. Our research makes several distinctive contributions to the literature. First, we develop a novel methodological framework that integrates multiple analytical dimensions to assess competition in consolidated banking markets. Second, we provide comparative insights across major economic regions, revealing how institutional and regulatory contexts shape consolidation outcomes.