Bank mergers in North America are now so routine that their rationale has taken on the ring of received wisdom. Merge and reap the rewards of scale economies, complementary business strategies, and geographic diversification, we are told frequently, if not interminably. The refrain is echoed in the press releases of the merged institutions, which assert that they will soon emerge as industry leaders, to the benefit of shareholders and customers alike.

But are the benefits of bigness so great and so unambiguous? What, in fact, can size do for banks and what can't it do?

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