Ethical Leadership and Employee Performance in the Global Finance Sector

Beatrice Chuchu and Dr. Dinah Keino
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Beatrice Chuchu: Daystar University, Nairobi, Kenya
Dr. Dinah Keino: School of Business and Economics (SBE), Daystar University

African Journal of Commercial Studies, 2026, vol. 7, issue 4

Abstract: This paper provides a comprehensive review of the relationship between ethical leadership and employee performance within the global finance sector. The study analyses the influence of ethical leadership on employee outcomes and identifies strategic applications for integrating ethical leadership practices into financial sector frameworks. A systematic literature review methodology was employed, synthesizing empirical evidence from financial institutions across the United States, Nigeria, Indonesia, South Africa, Tanzania, and Pakistan. The review is anchored in Social Exchange Theory and Stakeholder Theory and draws upon quantitative studies employing Kendall's Tau-b correlation, multiple regression analysis, Partial Least Squares Structural Equation Modelling (PLS-SEM), and descriptive survey designs. The findings demonstrate a strong and statistically significant relationship between perceived ethical leadership and positive employee behavioural outcomes. Ethical leadership is associated with reduced unethical behaviour, improved employee performance, stronger corporate ethical values, enhanced leadership effectiveness, and increased stakeholder trust. The study extends Social Exchange Theory by demonstrating how transparent decision-making and fair treatment foster psychologically safe work environments while advancing the dual-pillar framework of the moral person and moral manager within the financial sector. The study concludes that ethical leadership constitutes a strategic capability that strengthens organisational resilience, competitive advantage, and stakeholder confidence. It recommends embedding ethical leadership within financial sector governance frameworks through leadership development programmes, transparent accountability mechanisms, and stronger alignment between corporate governance and ethical standards.

Keywords: Ethical leadership; Employee performance; Social Exchange Theory; Stakeholder Theory; Stakeholder trust (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:cwk:ajocsl:2026-046

DOI: 10.59413/ajocs/v7.i4.12

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