Corporate Governance and Access to External Finance in Small Firms in Katsina State

This study examines the relationship between corporate governance practices and access to external finance in small firms in Katsina State, Nigeria. Access to finance remains one of the most significant constraints facing small businesses in the North West geopolitical zone, with many firms reporting difficulty obtaining bank loans and equity financing. Financial institutions increasingly use governance quality as a proxy for creditworthiness, making governance practices an important factor in financing decisions. This study draws on the signalling theory and resource dependence theory to examine how governance elements including board structure, financial reporting quality, and ownership transparency relate to small firms' financing access outcomes. A survey design is adopted, with 160 small firm owners and managers in Katsina participating. Data are also sourced from structured interviews with loan officers at five commercial banks operating in the state. Data are analysed using descriptive statistics and binary logistic regression. The study anticipates that firms with formal governance structures and audited financial statements have significantly higher probabilities of obtaining external finance. Findings will assist small business support institutions, the Bank of Industry, and the Development Bank of Nigeria in designing governance-linked financing programmes. Keywords: corporate governance, external finance, small firms, access to credit, Katsina State.