Not only based on the standards set by Fair Trade Commission of Korea, but with Bank Merger Guidelines of the United States, monopolistic or oligopolistic market dominance is not serious regarding competition structure of bank industry in Korea. Nevertheless, it is worried that the degree of competition in bank market has been weakened by sharp increase of market concentration since the financial crisis. This research, therefore, analyzes the degree of competition in bank market from 1992 to 2006, dividing the period into two: the pre-financial crisis period and post-financial crisis period.

As results, the both following beliefs are turned to be wrong under the present conditions; enlarged risks of financial system caused by bank consolidation and low competition in bank industry affect financial stability negatively; and policy for bank competition should be strengthened because inefficient operation of large sized banks may levy a burden on national economy. However, large-sized banks have competed fiercely each other in order to maximize their income. Therefore, in this research it is pointed out that the government ought to consider bank consolidation positively henceforth for improvement of national competitive power of financial institutions. In addition, the government should establish a judging system for financial enterprise consolidations so that banks can predicts policies and decrease transaction costs.