Abstract

This study explores how different leadership styles influence the quality of micro, small, and medium enterprise (MSME) loans, focusing on Non-Performing Loan (NPL) ratios within Bank Rakyat Indonesia (BRI) Regional Office 10, Semarang. Using the Full Range Leadership Model (FRLM), the research investigates the effect of transformational, transactional, and delegative leadership on credit outcomes in a highly regulated banking environment. Data were collected from branch managers and credit officers through structured surveys and operational NPL performance reports from 2021–2024. Statistical analysis indicates that transformational leadership enhances team motivation and ethical discipline, thereby improving loan repayment behavior. Transactional leadership strengthens compliance and monitoring through contingent rewards and corrective feedback, leading to lower NPL ratios. Conversely, delegative leadership, characterized by minimal supervision, correlates with weaker control and increased NPL risk. The study emphasizes that transactional leadership has the strongest negative relationship with NPL levels. These findings contribute to the integration of leadership theory into financial risk management and provide insights for leadership development, human capital strategies, and regulatory governance in the Indonesian banking sector.