Customer Concentration and bank loan contracts: Evidence from the Tehran Stock Exchange

The variables of customer concentration and bank loan contracts can affect corporate finance activities, and customer concentration may increase corporate returns.

Under this study, the relationship between customer concentration and bank loan contracts have been investigated first and then the moderating effect of financial status variables and accounts payable on relationship between these variables have been measured. The statistical population of the study consisted of all listed companies in the Tehran Stock Exchange with regard to specified conditions, over the period of 6 years from 2011 to 2015.

The results of the research show that there is a negative and significant relationship between customer concentration and bank loans has. In addition, the financial situation and accounts payable exacerbate the negative relationship between customer concentration and corporate bank lending.

With increasing customer concentration, banks are likely to consider tightening rules for corporations, and as a result, firms face financing constraints. Also the increase in the financial leverage and accounts payable that are important indicators in the decision making of banks for lending makes financial providers skeptical and therefore they would try to impose further restrictions on companies through getting collateral.