A Study of Influencing Leadership Styles on Financial Performance in Saudi Arabian Commercial Banks

Abstract

This study examined the relationships between different leadership styles and bank performance in Saudi Arabia. The partial least squared was conducted to assess the impacts of autocratic, democratic, laissez-faire, and transformational leaderships on financial performance of banks using data from 199 responses collected from 7 Saudi banks. The findings revealed that autocratic leadership had a significant positive effect on performance, while democratic leadership's influence was insignificant. Transformational leadership did not significantly impact outcomes despite correlating strongly with democratic leadership. Laissez-faire leadership was found to negatively influence transformational leadership. These findings provide useful insights yet also merit deeper examination of moderating factors. Autocratic leadership appears suitable given local preferences for hierarchy, but risks stifling creativity long-term. Democratic leadership fosters innovation but still be unable to affect positively the decision-making efficiency. Transformational leadership unexpectedly doesn’t positively affect the financial performance of banks in Saudi Arabia.