This paper analyzes the effects of the two waves of financial reforms implemented between 2002 and 2008 in the Taiwan banking industry. The first financial reform aimed to raise capital adequacy ratios and reduce nonperforming loans. The second financial reform encouraged banks to merge. We investigate the impact of the reforms on market competition and consumers' welfare. Using a structural demand model for saving and borrowing in a differentiated market, we find that a bank's capital adequacy rate has a positive impact on the utility of both savers and borrowers. Contrarily, the ratio of non-performing loans has no significant effect. During these reform periods, market competition tended to decline while consumers' welfare dropped for both savers and borrowers. Nonetheless, when we use counterfactual experiments to isolate the direct effect of reform policies from other factors, we find that the first reform had almost no effect on market competition while raising both savers' and borrowers' welfare. On the other hand, the second reform reduced market competition, increased savers' welfare, but decreased borrowers' welfare.