The industrial and banking sectors have each seen consolidation over the past fifteen years, with small institutions representing an ever-shrinking share. Existing literature argues that small banks' comparative advantages lie in small-business finance. We argue that some of the consolidation in the banking sector is a consequence of changes to the industrial organization of the real economy. We use a Bartik instrument and variation in exposure to industries with different patterns of small-business growth to show that the real-side demand for small-business finance is partially responsible for the relative decline in the deposits, income, and loan growth at small banks. We do not find that small-business growth impacts large banks nor do we find that large-business growth affects small banks. The results are predominantly driven by the propensity of small banks to be acquired.