Transformational leadership and employee performance in international commercial banking industry in Malaysia: The role of self‑efficacy as a mediator under BRI

Abstract

Introduction - Since Belt and Road Initiative (BRI) was proposed by the Chinese government, Malaysia, as a vital link in Asia, has actively responded to the initiative. Thus, China has increased foreign direct investment (FDI) in Malaysia and has become the largest investor. Due to the spreading of Covid-19, the progress of Belt and Road projects has been dragged down, which has caused Malaysian government treasury deficits and an increase of credit risk to the bank. In order to control costs and compliance with government policy to prevent the spread of the Covid-19, Malaysia international commercial banking industry service has shifted their work and tasks from office to home. Purpose - The research focused on discovering the direct and indirect relationship among transformational leadership, self-efficacy, and employee performance in the international commercial banking industry in Malaysian. Design/methodology/approach - Quantitative Approach Findings - In this study, 450 survey questionnaires were distributed to international commercial banks in Malaysian, and after data cleaning and screening, 302 questionnaires were valid. By analysing with SmartPLS, the result illustrated that all four hypotheses were supported, where self-efficacy significantly mediated the relationship between transformational leadership and employee performance. Conclusion - The research investigated the improvement methods of employee' performance to maintain the bank's services, in which excellent leadership plays a vital role in managing employees to reach higher performance. Thus, positive changes in transformational leadership in the banking industry should be promoted. Moreover, employees should strive to maintain their innovation at work, which will be beneficial to the smooth operation of the banking industry and maintain the economic chain services of BRI during the Covid-19 period.