A Functional Stakeholder Model of Corporate Governance for Banks in Challenging Institutional Contexts: A Case Study of Nigeria

This thesis seeks to address the limited stakeholders’ recognition and protection under the Anglo-Saxon corporate governance model currently practised in Nigeria. The Anglo-Saxon corporate governance model originated from the UK and the US and focuses on profit maximisation for shareholders’ benefit at the expense of other stakeholders, such as customers and employees. The thesis argued that the relative success of the Anglo-Saxon model in developed economies, such as the UK, is because of the availability of functional institutions, such as an efficient legal system which includes the state apparatus for making, interpreting and enforcing the law. The UK Anglo Saxon model is dependent on an active external market for corporate control and organised civil societies for its success. Nigeria inherited the UK corporate governance model because of its historical past. Despite the differences in their institutional environments, Nigeria has continued to model its corporate governance framework on that of the UK, despite its inefficient legal system resulting from the systemic corruption across the entire branches and tiers of government. Thus, implementing the UK’s corporate governance model in Nigeria has deviated from what theories have envisaged. This is due to Nigeria's institutional environment, evidenced by its weak institutions, such as inadequate legal, regulatory and supervisory systems, insiders’ ownership concentration, an underdeveloped capital market and systemic corruption across the entire branches and tiers of government. This has resulted in Nigeria’s persistent banking failures because of the weak corporate governance framework, evidenced by inaccurate reporting and non-compliance with regulatory requirements, gross insider abuses resulting in substantial non-performing insider related loans, persistent illiquidity, and poor assets quality. Because of Nigeria’s institutional voids, when banks fail, stakeholders, mostly customers and employees, suffer because the current framework does not offer them any protection. Therefore, given Nigeria’s challenging institutional context, this thesis proposes an alternative corporate governance framework in the Nigerian banking sector that will promote the recognition of stakeholders and protect stakeholders’ interests. The thesis makes original contributions to the existing scholarship in comparative corporate governance and regulation, particularly as it relates to banking regulation and stakeholders.