Relationship between executive leadership styles and financial performance of rural banks in Ghana

Abstract

The relationship between Leadership Styles and Financial performances of rural banks in Ghana has been explored using 34 out of the 136 rural banks in Ghana. Using an exploratory relational and descriptive approach with a cross sectional and a quantitative design that relied on both primary and secondary sources of data, the results suggests that there is a relationship between leadership styles and financial performance of rural banks in Ghana. Both the descriptive and inferential analysis suggests that with an error margin of 0.05 tasks oriented leadership is the most effective executive leader style for Rural Banks in Ghana, irrespective of the situational variables, whether favourable or unfavourable. The results indicated that task oriented leadership has a positive relationship with strong and satisfactory financial performance of the rural banks with a correlation coefficient of 0.306, while people oriented leader was slightly positive with about 82.8% fair performance and 27.8% satisfactory performance and a correlation coefficient of 0.211. This contradicts the contingency theory, which prescribes that about 79% of the leaders in the study should use people oriented leadership style as the most effective when the leader-member exchanges is moderate to strong or good. On the contrary, the study confirmed the contingency theory that Laissez-faire management should have no place at all in leadership and management practices, with all the laissez-faire leaders being associated with highly unsatisfactory performing banks in Accra, Ghana

Key words: executive leadership style, financial performance, leader-member exchange