Banking System, Canada & US
Limiting the scope to the question of why the US encouraged the proliferation of many banks, one important contributor was the 1927 McFadden act, which placed significant restrictions on interstate banking (rolled back through state laws in the 1980s-90s, and eventually substantially repealed by the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994).

The reasons for this were primarily concerns about concentration in the financial services sector, and concerns about the ability of state banking supervisors to monitor across state lines the activities of institutions for which they were responsible.

The trend in the US since at least the 1980s has indeed been towards consolidation: http://research.stlouisfed.org/fred2/series/FREQ



Finally a (dated, but good) review of the effects of branch banking reform is available from the FRBNY: http://www.newyorkfed.org/research/current_issues/ci1-2.pdf