Impact of Financial Intermediation on Corporate Governance in Nigeria

Abstract

This research work is centered on the impact of financial intermediation on corporate governance
in Nigeria using agency theory, financial intermediation theory and stakeholder theory, which all
apparently imply that financial intermediaries help to minimize information asymmetry, monitor
managerial behaviour and also balance the interests of a number of different stakeholders. Primary
data obtained from structured questionnaires was administered to 150 respondents from deposit
money 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 of
intermediation functions (financing, monitoring and advisory) on governance mechanisms (board
structure, transparency and accountability). Descriptive and inferential statistics were employed to
analyse the data and test the related hypothesis which reveal that financial intermediation
significantly strengthens governance mechanisms, while the monitoring and advisory roles of
intermediaries enhance governance efficiency and firm performance. Results showed a positive
relationship between financial intermediation and corporate governance, which implied that
intermediaries are important in facilitating ethical and transparent managerial practices. The
findings suggest that policy makers and regulators should improve institutional frameworks that
link financial access to governance compliance, while firms also strategically use financial
intermediaries to improve governance standards and accountability. The study contributes to
knowledge by providing recent primary evidence on the governance-enforcing role of financial
intermediaries in Nigeria.