Does Banking Consolidation Harm Households

May 2026

Does Banking Consolidation Harm Households?

Celso Brunetti, Jeffery H. Harris, Ioannis Spyridopoulos

Abstract:

No, in the mortgage market. Using confidential micro-level data combining mortgage contracts with credit and repayment records for 44 million loans spanning 5,000 bank mergers over nearly three decades, we find no changes to mortgage rates, approval rates, or delinquency rates. Local mortgage markets remain remarkably competitive despite consolidation, averaging over 100 active lenders in each county every post-merger quarter. Our findings reveal significant merger selection motives: large acquiring banks target community banks with relationship-intensive, portfoliolending business models, whereas community banks appear to merge together to gain scale and compete. Overall, our study challenges the view that bank mergers increase market concentration and create market power that harms household borrowers.

Keywords: Bank mergers, banking consolidation, mortgage lending, market power, competition, community banking, consumer welfare, credit access

DOI: https://doi.org/10.17016/FEDS.2026.027

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