The Relationship Between Tourism Income and Financial Development in The Mena Countries

Abstract

The purpose of this study is to determine the causality between financial development and tourism income for the MENA economies between year 1995 and 2016. Design/Methodology/Approach-To do this, we employ Dimitrescu and Hurlin (2012) panel causality test depending on rolling window regression and Emirmahmutoğlu and Köse's (2011) panel causality test.

The nexus between tourism, financial development, and economic growth: Evidence from African countries

“…In other words, variations in tourism give rise to variations in financial development, and changes in financial development cause changes in tourism. This finding is consistent with the empirical literature, which posits that financial development has the capacity to influence tourism because it increases the efficiency of tourism investments and infrastructure, reduces transaction costs, and changes savings behavior (Yenisehirlioglu & Bayat, 2019). Conversely, tourism activities and investment can create significant positive changes in the activities of the financial sector (Katircioglu et al, 2018).…”

“…The tourism sector benefits from a well‐functioning financial system because the latter mobilizes the financial resources required for fund tourism investment. This finding is consistent with some studies (Katircioglu et al, 2018; Yenisehirlioglu & Bayat, 2019). This finding implies that efforts to promote financial development will enhance tourism development.…”

“…Although the finance–growth nexus and the tourism–growth nexus have received considerable attention from scholars, the empirical outcomes are mixed and inconclusive. For instance, some studies have argued that the finance–growth nexus depends on the level of financial and economic development (Arcand et al, 2015; Law et al, 2018), while other studies posited that the tourism–growth nexus depends on the level of tourism development (Brida et al, 2016; Yenisehirlioglu & Bayat, 2019). However, the tourism and financial sectors could be driven by expansion in economic activities, because rapid economic expansion could give rise to tourism infrastructure, education, and safety, which could attract more international tourists and revenue (Tang et al, 2019).…”

Tourism and financial development in South Africa: a trivariate approach

“…Of the studies that investigated the impact of tourism on financial development, there is overwhelming evidence of a positive effect of tourism on financial development. However, among the few studies that took the analysis further and analysed the causal relationship between tourism and financial development, the results are inconsistent (see, Basarir & Cakir, 2015;Shahbaz et al, 2015;Shahbaz et al, 2019;Yenisehirlioglu & Bayat, 2019). The mixed results from the studies that have been conducted on the causal relationship between tourism and financial development makes generalisation of the results to other countries inappropriate.…”

“…Nevertheless, the same cannot be said for studies that investigated the causality between tourism and financial development worldwide and in South Africa in particular. There is a dearth of literature on the causality between tourism and financial development (see, Shahbaz et al, 2019;Yenisehirlioglu & Bayat, 2019;Basarir & Cakir, 2015). This is despite the importance of the knowledge on the direction of causality between the two, especially to policy makers.…”