Impact of Financial Intermediation on Corporate Governance in Nigeria

This research work is centered on the impact of financial intermediation on corporate governancein Nigeria using agency theory, financial intermediation theory and stakeholder theory, which allapparently imply that financial intermediaries help to minimize information asymmetry, monitormanagerial behaviour and also balance the interests of a number of different stakeholders. Primarydata obtained from structured questionnaires was administered to 150 respondents from depositmoney banks, insurance firms, and corporate organizations listed on the Nigerian Exchange Group(NGX), with valid responses obtained from 138 respondents. The study investigates the effect ofintermediation functions (financing, monitoring and advisory) on governance mechanisms (boardstructure, transparency and accountability). Descriptive and inferential statistics were employed toanalyse the data and test the related hypothesis which reveal that financial intermediationsignificantly strengthens governance mechanisms, while the monitoring and advisory roles ofintermediaries enhance governance efficiency and firm performance. Results showed a positiverelationship between financial intermediation and corporate governance, which implied thatintermediaries are important in facilitating ethical and transparent managerial practices. Thefindings suggest that policy makers and regulators should improve institutional frameworks thatlink financial access to governance compliance, while firms also strategically use financialintermediaries to improve governance standards and accountability. The study contributes toknowledge by providing recent primary evidence on the governance-enforcing role of financialintermediaries in Nigeria.