Since monetary stabilization in 1994, bank consolidation has beengathering pace in Brazil as part of a global concentration trend followingbank deregulation processes. This article analyses the effect of bankconcentration on lending in Brazil in the period 1995-2004, distinguishingtwo stages and estimating panel data for Brazil's 27 federative units. Theresults support the hypothesis that the process of consolidation in theBrazilian banking sector has an adverse effect on lending, which mainlyharms the less developed regions of the country.