Using commercial bank data from eight major Asian countries, we examine the relationship between the banking market size structure and the stability of financial institutions. We show that larger banks tend to have lower capital adequacy ratios, liquidity ratios, and distance-todefault ratios. We further find that a rise in large banks’ market power, accompanying an increase in their market shares, lowers the capital adequacy of small banks. Small banks’ non-performing loans and the possibility of their bankruptcy also increase as large banks’ market shares rise. Our study suggests that large banks’ greater market shares are associated with small banks’ financial instability. Overall, our findings are consistent with the notion of the recent banking literature that has important antitrust policy implications.