Abstract :
The banking sector of Pakistan, a critical component of the nation's economy, continues to face persistent challenges related to employee job performance, evidenced by rising customer complaints and service quality concerns. Drawing upon Social Exchange Theory, Leader-Member Exchange Theory, Equity Theory, Expectancy Theory, and Job Demands-Resources Theory, this study investigates the complex mechanisms through which leadership styles influence employee job performance. Specifically, it examines the mediating role of work engagement and the moderating effect of performance appraisal politics on the relationships between transformational leadership, transactional leadership, and job performance (comprising task performance and organizational citizenship behavior). Data were collected from 500 employees across six major banks operating in Sindh, Pakistan, using a multi-stage stratified random sampling technique. Structural Equation Modeling (CB-SEM) with bootstrapping was employed to test the hypothesized relationships. The results reveal that both transformational (? = 0.44, p < 0.001) and transactional leadership (? = 0.32, p < 0.001) positively predict job performance, with transformational leadership demonstrating a significantly stronger effect. Work engagement partially mediates these relationships, explaining 52% and 44% of the effects of transformational and transactional leadership, respectively. Critically, performance appraisal politics moderates both the direct and indirect relationships, such that the positive effects of leadership on performance are substantially weakened (by up to 65%) when employees perceive higher levels of politics in performance appraisal. The findings are robust across alternative model specifications and split-sample validation. This study contributes to the literature by integrating multiple theoretical perspectives, contextualizing leadership effectiveness in a non-Western setting, and demonstrating the conditional nature of engagement-performance relationships. Practical implications for banks, policymakers, and regulators are discussed, emphasizing the need for transformational leadership development, engagement enhancement, and systematic reduction of appraisal politics to improve employee performance and service quality.