Mergers are, in general terms, any substantial acquisition of the assets or stock of
another firm, normally involving a process through which two entities become a
single one2. The purpose of this paper is to describe the effects of such operations
on competition and stability in the banking sector. In this sense, section one reviews
the theoretical and empirical literature regarding the incidence of bank mergers on
loan rates, quantities lent to small businesses and retail deposit markets (variables
deemed as competition indicators). Correlatively, section two describes the different
postures related to the stability outcomes of bank consolidation. Section three sketches
out the administrative or institutional consequences of the stability and competition
concerns related to concentration within the financial system. Finally, section four
concludes
