This study investigated the effect of leadership styles on job satisfaction and employee performance in the banking sector in Kenya. The study examined the effect of transformational, transactional and laissez-faire leadership styles on employee job satisfaction and performance at the Family bank of Kenya Limited. This involved a sample size of thirty seven (37) employees and thirteen (13) managers from nine Family bank branches within Nairobi City, obtained through stratified random sampling technique. Variables which include: leadership styles as independent variable, and job satisfaction and job performance as dependent variables were measured using multiple leadership questionnaire by Avolio and Bass (1995) and job satisfaction survey by Spector (1985). Staff evaluation form from Fraser University was used to measure job performance. Analysis of data was then done using SPSS Version 20.0, to establish relationships among variables. Hypotheses were tested using correlation and regression to investigate relation between variables to help bring out variance in dependent variables due to independent variable data operated through SPSS. Results pointed out Transformational style as most important and had largest effect on job satisfaction and employee performance followed by Transactional style. Also, results revealed favorable linear employee job satisfaction and performance relatedness with Transformational and Transactional leadership styles. Laissez-faire style negatively influenced employee job satisfaction and performance. The study recommended that banks adopt and improve on the existing transformational style but avoid Laissez-faire. The study also recommended that more studies should be conducted on factors affecting job satisfaction and employee performance beside leadership styles. Further studies should use larger sample to establish results generalizability. Also, further research might be necessary to ascertain availability and possibility of other influential factors fostering employee job satisfaction and performance.

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