Ethical Leadership in Nigerian Islamic Financial Institutions: A Study of Selected Banks in Lagos

This study examines ethical leadership practices in selected Islamic financial institutions (IFIs) in Lagos State, South West Nigeria, and their implications for organisational integrity and customer trust. As Islamic banking continues to expand its footprint in Nigeria, questions about the alignment of institutional leadership practices with Islamic ethical standards have gained increasing relevance for regulators, investors, and customers. The study employs a descriptive survey design with questionnaires administered to 150 employees and 200 customers of three major Islamic financial institutions operating in Lagos Island, Ikeja, and Victoria Island. Data were analysed using descriptive statistics and structural equation modelling. Findings indicate that while respondents rate top management as generally adhering to Islamic ethical standards in client interactions, internal ethical leadership, particularly in HR practices, employee communication, and grievance handling, receives significantly lower ratings. Customer trust is found to be significantly predicted by perceptions of institutional ethical leadership. The study recommends the adoption of a formal Islamic Ethical Leadership Framework in Nigerian IFIs, embedding Islamic ethics in leadership recruitment and appraisal criteria, and the creation of independent Sharia supervisory board oversight over HR practices. Keywords: ethical leadership, Islamic financial institutions, customer trust, Lagos State, Islamic banking.