This study examines the effect of bank concentration on financial leverage of Nonfinancial Pakistani companies controlling for firm specific determinants of the firm leverage covering the period 2006-2017.As regards bank concentration, thestudy targets 29 Pakistani banks whereas for the firm leverage, aggregate data of all the nonfinancial companies are taken, listed on the Pakistan Stock Exchange. Descriptive statistics and multiple regression analysis were used to analyze the data.Results indicate the significant positive effect of bank concentration on firm leverage in line with the information-based hypothesis implying that the high bank concentration may reduce information asymmetry between the banks and borrowers to improve the firms credit access.Results of the study may have implications for the academicians and mangers to comprehend the bank concentration effects in view of determination of the firm leverage and firms access to the credit.
Key words: Bank Concentration, Firm Leverage, Information-Based Hypothesis, Market Power Theory, Pecking Order Theory, Trade-off Theory.
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