This study examines the relationship between shadow banking and market[1]based finance, focusing on the effects of asset-liability mismatches and leverage. The sample size of 5 non-financial institutions was selected from the population of the 10 largest listed insurance companies in Nigeria. Data was retrieved from the annual reports and accounts of the sampled firms and the the fact sheet of NGX spanning through 2019-2023 financial years. Panel regression technique was employed for data analysis and results reveals that asset-liability mismatches have a strong negative impact on market-based finance, while leverage exerts a positive influence. Both relationships are statistically significant (0.000 and 0.006) respectively, highlighting the critical role of shadow banking mechanisms in shaping market-based financial activities. The findings suggest that inefficiencies in aligning assets and liabilities within shadow banking entities can adversely affect market-based finance, while appropriate leverage levels contribute positively. The study recommends that Non-financial institutions should monitor and manage asset[1]liability mismatches to prevent adverse effects on market-based finance. They should also evaluate the benefits and risks of leverage, ensuring that it contributes positively without creating systemic vulnerabilities.