61 Journal of the Research Society of Pakistan Volume No. 56, Issue No. 1 (January - June, 2019) Muhammad Anwar Rashid * Talat Islam ** Rabeea Asif *** Zeshan Ahmer **** Impact of Authentic Leadership on Employees Creativity and Innovation: Mediating Role of Psychological Capital Abstract Nowadays the banking sector wants innovation and creativity from its employees so that they can remain competitive by introducing new products and services for its customers. Considering this emerging challenge and following the literary gap, we aim at investing the mediating role of psychological capital between authentic leadership, innovation, and creativity. The data for this study was collected from 276 employees through google forms and results were generated using SPSS. The results revealed a positive impact of authentic leadership on creativity and innovation. Further, psychological capital was found to perform the role of mediator. Implications and limitations of the study are also discussed. Keywords: Leadership, Banking sector, Creativity, Innovation, Pakistan. Introduction In today‟s world, businesses are facing cut -throat competition due to advance technology and globalization. Only organizations with utmost creativity and innovation in the form of goods, services, and processes can excel in this competitive environment. According to Amabile (1983), creativity is the creation of new and productive ideas. Creativity is considered to be the main element of innovation. Many factors have been reported to influence employees‟ creativity and innovation e.g. organizational culture, job satisfaction, individual creativity, organizational innovativeness, goal setting, physical work environment and encouragement from the organization, learning orientation and leadership styles. There are many types of research that show that employs‟ personal traits and aptitudes made them more creative. For example, different variables such as work- * Muhammad Anwar Rashid, served as member PPSC, Director General Anti-Corruption and Secretary to the Government. E-mail: manwarrashid@gmail.com ** Talat Islam (Corresponding Author), Assistant Professor at Institute of Business Administration, University of the Punjab, Lahore, Pakistan. E-mail: talatislam@yahoo.com *** Rabeea Asif, MBA (1.5 Year) research scholar at Institute of Business Administration, University of the Punjab, Lahore. E-mail: rabeea.asif15@gmail.com **** Zeshan Ahmer, Assistant Professor at Institute of Business Administration, University of the Punjab, Lahore, Pakistan. Email: zeshan@ibapu.edu.pk