nep-tur New Economics Papers
on Tourism Economics
Issue of 2022‒09‒05
two papers chosen by
Laura Vici
Università di Bologna

  1. Does tourism influence financial development in Kenya? By Musakwa, Mercy T; Odhiambo, Nicholas M
  2. Predicting international tourist arrivals in Greece with a novel sector-specific business leading indicator By Anastasiou, Dimitris; Drakos, Konstantinos; Kapopoulos, Panayotis

  1. By: Musakwa, Mercy T; Odhiambo, Nicholas M
    Abstract: In this study, we investigate the impact of tourism on financial development in Kenya using time series data from 1995 to 2017. The study uses the autoregressive distributed lag (ARDL) bound testing approach to cointegration and error correction model to examine this linkage. To increase the robustness of the results, the study uses two proxies of financial development, namely broad money (bank-based financial development proxy) and total value of stocks traded (market-based financial development proxy). Results show that tourism has an insignificant impact on financial development in Kenya ? both in the short and in the long run. The results apply irrespective of whether the financial development is proxied by a bank-based financial development indicator or by a market-based financial development indicator. This finding points to the fact that, although tourism is one of the main sources of foreign exchange in Kenya, it has no direct impact on financial development. The findings from this study add value to policy makers in Kenya by revealing the insignificant impact tourism has on financial development, although it is contrary to other studies that found a positive contribution. Based on the findings, Kenya may not anchor its financial development policies on tourism.
    Keywords: Financial development; market-based financial development; bank-based financial development; tourism; Kenya; ARDL approach
    Date: 2022–07
  2. By: Anastasiou, Dimitris; Drakos, Konstantinos; Kapopoulos, Panayotis
    Abstract: We introduce a novel tourism-specific business expectations sentiment index and explore whether it can operate as a leading indicator for international tourist arrivals in Greece. Using monthly data spanning 2002-2021 and employing a VAR model, we document that this newly introduced tourism-specific business expectations serves as a leading indicator, whose higher levels foreshadow increased demand for international travel. We also find that its inclusion in a tourism-oriented model increases forecasting accuracy, which can be utilized by travel agent businesses, local government officials and policymakers in their efforts to predict tourist arrivals in Greece.
    Keywords: Leading Indicator; Expectations; Tourist Arrivals; VAR; Greece
    JEL: C22 C53 E0
    Date: 2022–07

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