Australian Journal of Business and Management Research Vol.2 No.05 [30-36] | August-2012 ISSN: 1839 - 0846 30 THE EFFECTS OF CORPORATE GOVERNANCE ON PATRONAGE OF BANKING SERVICES IN NIGERIA T.A.NGEREBO-A, Ph.D (Corresponding Author) Department of Banking & Finance, Faculty of Management Sciences, Rivers state university of science & technology, P. M. B. 5080, Port Harcourt, Rivers State oniminp2002@yahoo.com SWENEME YELLOWE, B.Sc Department of Banking & Finance, Faculty of Management Sciences, Rivers state university of science & technology, P. M. B. 5080, Port Harcourt, Rivers State ABSTRACT The study was carried out to investigate banks’ corporate governance practices and how they affect service patronage, how corporate image influences patronage and performance of banks. The study focused on selected banks in Port Harcourt, Rivers State. A descriptive research design was used in the conduct of the research since it enables data required for the study to be obtained and interpretation to be based on the data obtained. Primary data formed the nucleus of the data used for the research. Data analysis was initially done using tables and simple percentages and hypotheses postulated were tested using the chi-square analytical technique. Based on the data collected, it was found that corporate governance has a significant influence on the patronage of banking services hence banks ’ performance. Some of the recommendations made include; banks should enthrone good corporate governance practices to promote the patronage of banking services for long run profitability and should strive hard to put in place internal control mechanism that will promote customer loyalty and sustained patronage of services. Keywords: Corporate Governance, Patronage, Banking Service in Nigeria 1. BACKGROUND OF THE STUDY The growth and development of every economy depends on the country’s financial system. In Nigeria the banking industry practically commands the financial sector (Gbosi, 2010). The industry has undergone series of restructuring all geared towards protecting deposit funds, maintaining and ensuring soundness of banking, and improving welfare of employees and stakeholders. The banking sector has been bedeviled with internal (workers and investors) and external (depositors and general public) dissatisfaction, culminating to an image problem. As a result, most banks have sort for improved technology like information and communication technology (ICT), total quality management strategies, restructuring etc., to compete more effectively and to solve these problems. Though these strategies have brought about some changes, yet they have not successfully solved the most sensitive problems of people and governance. Shonibare, (2000) states, organizations (institutions) that have attempted to redefine their business strategies without understanding and appreciating the need to align and make “people” the bedrock of their strategies succeed only in compounding the problem they sought to solve. Hence Toby (200 6) also stated that “banks must get to know their customers better if they are to compete successfully”. The success of any firm depends highly on the human element (the workers, managers, customers, shareholders, etc.) (Philip, 2002). This emphasizes a direct relationship between corporate governance and organiza tional performance and has been assumed to be the “internal system encompassing policies, processes and people which serve the needs of shareholders and other stakeholders, by directing and controlling management activities with good business savvy, objectivity and integrity (O-Donnvoan, 2003). Corporate governance is a policy measure put in place by regulatory authorities to regulate operation and monitor the governance structure of