Effects of leadership on the effective performance of Ethiopian banking industry

Debebe Alemu Kebede,Kenenisa Lemi

doi:10.22437/ppd.v8i4.9418

Debebe Alemu Kebede, Kenenisa Lemi

Open Access

https://doi.org/10.22437/ppd.v8i4.9418

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Abstract

The aim of the study was to examine the effect of leadership on organizational performance with specific reference to Commercial banks operate in Jimma Town. To achieve the objectives the study causal type of research and panel design was used to examine effect that leadership exert on the bank’s performance. The primary data sources were leaders on different levels and their subordinate employees while, the secondary data sources were annual report of individual banks. Multifactor Leadership Questionnaire was adapted for collecting the data. The descriptive and inferential analyses was conducted to analyze the collected data. Subsequently, the Random Effect Model was used to investigate the extent of relationship between variables. The study results revealed that the existing leadership brings changes in working environment by inspiring and motivating employees for changes, creation, innovation, to go beyond from what they actually think they can; and reward employees and make recognition in exchange for the work they perform, giving close directions and guidance have positive and significant effect in promoting the performance of the bank. Hence, the leaders of banks should focus on playing a role model and stakeholders in the industry should consider taking banking in a non-traditional.

Highlights

For the last half century the field of leadership has struggled to under-stand what exactly leadership is, under what contexts or situations it is effectively exercised, and how to explain leadership processes in addition to leader traits, skills and competencies (Bass, 1990; Yukl, 2006)
The result depicted that existence of positive relationship effective performance of the banking industry in Ethiopia have with the considered variables which are consistent with previous studies
The existence of positive and strong relation of transactional leadership style on the Return on total assets (ROA) implies the reward and recognitions that leaders make for fellow subordinates up on accomplishment of the given task has strong effect on the performance

Summary

Introduction

For the last half century the field of leadership has struggled to under-stand what exactly leadership is, under what contexts or situations it is effectively exercised, and how to explain leadership processes in addition to leader traits, skills and competencies (Bass, 1990; Yukl, 2006). The essence of leadership is not found in the leader per se, but in the relationship that exists between the leader and his or her subordinates and it is the process of influencing others towards achieving some kind of desired outcome. Leadership style is the way in which that process is carried out. Leadership style is a key determinant of the success or failure of any organization. Ensuring the effective leadership is becoming a critical issue for the success of modern business organization and the focus on it is increasing recently as the challenge of running business is enormous. Several theories had emerged and paved the way for the coming of modern leadership styles that can be understood in the organizational context

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