The Relationship Between Emotioal Intelligence And Leadership Effectiveness Among Kenyan Indigeneous Banks 2015
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Date
2015-09-01
Journal Title
Journal ISSN
Volume Title
Publisher
The Southern African Institute of Management Scientists (SAIMS)
Abstract
The banking industry is one of the greatest agencies of commerce in the world industrial
development (Nager, Masih & Badugu, 2011). However, it is notable that many economists
blame banks’ behaviour and practices as the main causes of financial crisis (Brunnermerier,
2009). The consequence of such behaviour and practice has been numerous financial crises in
the last six decades resulting to dismal performances of most world economies (Grant Thornton,
2013).
In Africa, the bank systems are highly concentrated and characterised by small size national
markets, low income levels, weak creditor rights, low deposit, low intermediation, few barriers to
entry, dominant foreign banks and weak judicial mechanisms (Mlachila, Park & Yaraba, 2013;
Van Ballekom, 2013). This makes Africa the lowest performer in the world in terms of financial
access. Like its counterparts in Africa, Kenya has had its share of financial crisis between
especially between 1970 and 2000 making over 20 banks and other financial institutions to go
bankruptcy and close down (Ambutsi, 2005; Mwangi, 2012; Sokpor, 2006). The failed banks
were locally privately owned banks commonly known as indigenous banks. The cause of failures
was attributed to ineffective leadership (Mwangi, 2012; Njuguna, 2013).
Accordingly to numerous studies, the overall bank effectiveness results from the leadership
exercised (Kubicek, 2011; Donnelly, 1994; Grant Thornton, 2013). Such leadership
effectiveness is attributed to leadership competencies (Al-Zoubi, 2012). Al-Zoubi (2012)
observes that leaders with the right competencies are able to integrate required tasks and
provide direction for effectiveness. A major leadership competency is emotional intelligence (IE),
an essential component for leadership effectiveness which has received much attention in
leadership research (Higgs & Dulewicz 1999; Sadeghi & Pihie, 2012; Tang, Yin & Nelson, 2010;
Trabun, 2002). Goleman (1998) argues that good management of emotional competency leads
to effectiveness and outstanding performance. Numerous studies have supported the
relationship between emotional intelligence and leadership effectiveness as major determinant
between effective and ineffective leaders (Goleman, 2001; Kerr, Garvin, Heaton & Boyle, 2006;
Reilly & Karounos, 2009; Weisinger, 1998).
Given the importance of EI as a leadership competency, the aim of this study was to assess the
relationship between emotional intelligence competency and leadership effectiveness within the
indigenous banking industry in Kenya. Whilst there is evidence that leadership effectiveness
impacts organisational effectiveness (Cooper, Fenimore & Nirenberg, 2012; Hawkins, 2012;
Hesselbein Goldsmith & Beckford, 1996; Jones, 2008; Nyabadza, 2008), the empirical findings
in this regard will not be presented in this paper. Furthermore, the lack of research on emotional
intelligence competency among Kenyan bank leaders further motivated a need to investigate the
level of competency and its effect on bank leadership effectiveness.
In this paper the following will be discussed: Firstly a brief synthesis of the literature on EI and
LE will be given. This will be followed by the problem statement, purpose, objectives and
hypotheses. Next, the methodology used in this study will be described. Thereafter the findings
of the study are presented and discussed. Lastly, the paper concludes with limitations and
managerial implications.
Description
Journal Article
Keywords
Emotional Intelligence, Leadership Effectiveness, Structural Equation Model, Indigenous Banks Effectiveness
Citation
Muriithi, S. M., Louw, L. & Radloff, S. E. (2015). The Relationship Between Emotioal Intelligence And Leadership Effectiveness Among Kenyan Indigeneous Banks 2015. The Southern African Institute of Management Scientists (SAIMS)