Preliminary communication
https://doi.org/10.30924/mjcmi/2017.22.2.65
Impact of leadership style on bank profitability: Case study of a bank in Bosnia and Herzegovina
Adisa Delić
; University of Tuzla, Faculty of Economics
Emira Kozarević
orcid.org/0000-0002-5665-640X
; University of Tuzla, Faculty of Economics
Mersiha Alić
orcid.org/0000-0001-9912-3147
; Indiana Institute of Technology
Abstract
The goal of this paper is to demonstrate the extent to which the quality of the leader-follower relationship, expressed by the LMX coefficient, affects the bank profitability. Banks characterised by a high level of LMX possess a successful social atmosphere and interpersonal relationships, which is reflected in the emotional support and willingness to share resources, knowledge, and information between employees. Such a relationship between leaders and followers contributes to creating favourable social atmosphere, significantly affecting the overall performance of banks. Empirical research presented in this paper uses the data collected from a business network of a specifically selected Bank. The data was collected via a modified version of the LMX-7 questionnaire, focusing on each branch of a selected bank. Concrete indicators were analyzed (such as net profit margin, ROA, and ROE), which helped establish a link between profitability and the degree of leader-follower communication exchange (measured by LMX coefficient). The results reveal that the applied leadership style directly impacted on the profitability of a selected bank, indicating that this finding could be used as input for management systems of similar financial institutions as well as a catalyst for further research in this field.
Keywords
banks; leadership; leader-member exchange (LMX); in-group exchange; out-group exchange
Hrčak ID:
191209
URI
Publication date:
21.12.2017.
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