An Original Comparative Institutional Analysis of Informal Credit Market Governance Across Nigeria’s Geopolitical Zones

Informal credit markets in Nigeria serve the majority of the population excluded from formal financial systems, yet their governance structures, performance implications, and regional variations have not been systematically analysed through a comparative institutional lens, creating a gap this study fills with an original comparative institutional contribution. This study conducts an original comparative institutional analysis of informal credit market governance across Nigeria's six geopolitical zones, developing an original Informal Credit Market Governance Typology (ICMGT) that classifies the governance structures through which credit is allocated, enforced, and regulated outside formal financial institutions. Empirical data were collected through a stratified multi-site research programme, combining 2-month fieldwork at 6 representative informal credit markets (one per geopolitical zone: Kano (NW), Maiduguri (NE), Abuja (NC), Lagos (SW), Enugu (SE), Port Harcourt (SS)) with a questionnaire survey of 900 informal credit market participants (150 per zone). Governance dimensions assessed include enforcement mechanisms, information asymmetry management, default resolution, interest rate determination, and group versus individual lending structures. Comparative institutional analysis methods, including Qualitative Comparative Analysis and cross-case pattern analysis, were employed. Results confirm four distinct informal credit governance types: Ethnic Fiduciary Networks (dominant in Igbo trading communities, SE), Rotating Savings Associations (dominant across SW and NC), Authority-Based Patronage Credit (dominant in NW and NE), and Hybrid Microfinance-Informal Hybrids (emerging in SS urban markets). Governance type significantly predicts credit access equity, interest rate levels, and default rates, with ethnic fiduciary networks showing the highest equity and lowest default rates. The ICMGT constitutes an original comparative institutional contribution and informs financial inclusion policy design for each geopolitical zone.

Keywords: informal credit markets, institutional analysis, governance typology, Nigeria, financial inclusion