HOLISTIC GOVERNANCE MECHANISM: THE ROLE OF FINANCIAL, SPIRITUAL, AND SOCIAL INTERMEDIATION ON THE SUSTAINABILITY OF ISLAMIC FINANCIAL INSTITUTION
Mohammed Mahmuda Khalifa
Volume 5 Issue 2
Abstract
This study examined a holistic approach to governance measured by financial, spiritual, and social intermediation shapes the sustainability of Islamic Financial Institutions (IFIs) in Nigeria. The motivation behind the study while staying true to their faith-based values and social mission lies in the need to strengthen the long-term viability of these institutions. The target population comprised governance-related staff across eight selected Islamic Financial Institutions in Nigeria, including Al-Hayat, Al-Barakah, Ihsan, Halal, Yusr, and Al-Mumtaz Microfinance Banks, along with Taj Bank and Jaiz Bank. A census approach was adopted due to the relatively small number of fully operational IFIs in the country. Structured questionnaires were administered to a total of 240 personnel, and 185 valid responses were analysed. Partial Least Squares Structural Equation Modeling (PLS-SEM) was used to examine how the three governance dimensions influence sustainability. The study found that while social and spiritual intermediation significantly support institutional sustainability, financial intermediation on its own does not have a direct effect. This suggests that governance must go beyond financial oversight it must also build trust with communities and remain grounded in Islamic ethical principles for IFIs to thrive,. The study recommended strengthening Shari’ah supervisory roles, deepening social engagement efforts, and creating supportive policies that encourage faith-based, community-driven governance practices across the Islamic finance sector. Keywords: Governance mechanisms, financial intermediation, Social intermediation, Spiritual intermediation, Sustainability, Islamic Financial Institutions, Nigeria.
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