Customer concentration and debt default risk: evidence from China

Jiaqi Wang, Licai Pan, Shuhui Li and Guangcai Zhuang

Asian Review of Accounting, 2026, 1-19

Abstract: PurposeFrequent defaults not only directly undermine creditors’ confidence, but also affect the stability of the stock market and trigger systemic financial risks. Therefore, it is urgent to explore the factors influencing the corporate debt default risk. While scholars have examined a wide range of determinants of corporate debt default, including macroeconomic conditions and corporate factors, few studies have approached the issue from a supply chain perspective. In practice, suppliers and customers are closely linked through sales and procurement relationships, and customer characteristics, especially customer concentration, generate spillover effects that influence firms' financing conditions and operating performance, ultimately shaping their debt default risk. Motivated by this gap, this study investigates whether and how customer concentration affects corporate debt default risk.Design/methodology/approachTaking Chinese A-share listed firms from 2009 to 2019 as the research sample, this paper empirically tests the impact of customer concentration on debt default risk.FindingsThe results show that customer concentration significantly increases debt default risk. Debt rollover and refinancing are identified as the key transmission channels. Heterogeneity analysis shows that for firms in high economic policy uncertainty, intense industry competition and those with large customer volatility, the impact of customer concentration on debt default risk is more significant.Originality/valueFirst, we enrich the literature on the influencing factors of debt default risk. Second, we advance the literature on the economic consequences of customer concentration. Third, this study fills this gap by showing that high customer concentration raises firms' debt financing costs and shortens debt maturities, thereby heightening rollover and refinancing risks and ultimately increasing the likelihood of debt default. Fourth, our study provides empirical insights relevant to policymakers.

Keywords: Customer concentration; Debt default risk; Debt rollover; Refinancing (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arapps:ara-09-2025-0329

DOI: 10.1108/ARA-09-2025-0329

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