Corporate governance practices’ influence on customer loyalty in Nigerian retail banks

Orientation: Customer loyalty is crucial in the retail banking sector, given the increasing competition within the industry and from emerging non-traditional players.Research purpose: This study sought to establish the influence of corporate governance practices on customer loyalty in Nigerian retail banks.Motivation for the study: Conducting a study of this nature highlights how corporate governance practices contribute to customer loyalty in the retail banking sector of Nigeria as a developing country in Africa.Research design, approach and method: Premised on relationship marketing and stakeholder theoretical orientations, the study used a sample of 424 bank customers scientifically selected from eight commercial banks identified within Ibadan Metropolis, Nigeria. A six-construct survey instrument was used to collect relevant data. Partial least square structural equation modelling (PLS-SEM) version 3 was utilised to ascertain the interaction between customer loyalty and corporate governance practices domains.Main findings: The result of the PLS-SEM model established that all corporate governance practices had a positive effect on customer loyalty at a very significant level (p < 0.01), except transparency and disclosure, which had an inverse relationship and effect on customer loyalty, though at a non-significant level (β = -0.005, p = 0.93). Presence of competent bank management had the highest positive influence on customer loyalty.Practical/managerial implications: The findings of this study will be useful for bank management and role players in the financial and other service sectors on the importance of good corporate governance and specific attributes of the identified corporate governance that are critical for business success.Contribution/value-add: This study was able to identify corporate governance practices from customers’ perspective, which is a departure from the traditional shareholder perspective in business studies. It has advanced the relatively known terrain in corporate governance and business literature by opening up new debates on the relevance of corporate leadership beyond the confines of the boardroom.