In the last few weeks, some have argued in public debate that competition in the banking sector is too high, which, in turn results in low profitability of banks. Quite often this was then linked to the number of banks being too high.
But as I have pointed out in the past, the number of businesses in a market is not a problem per se.2 Nevertheless, I agree at least in part with the conclusion that mergers & acquisitions might be appropriate for some institutions.