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Tourism-induced financial development in Malaysia: New evidence from the tourism development index

Author

Listed:
  • Shahbaz Muhammad
  • Ramzi Benkraiem

    (Audencia Business School)

  • Anthony Miloudi
  • Aviral Kumar Tiwari

Abstract

This article explores the relationship between tourism development and financial development by incorporating economic growth and the real effective exchange rate as additional determinants in the finance demand function of the Malaysian economy. Thus, the analysis relies on the bounds testing approach by accommodating structural breaks to examine the cointegration among the variables and investigates the causal direction between the variables by applying the Toda–Yamamoto Granger causality approach. The results show that all the variables are cointegrated over the period from 1975 to 2016; tourism development is positively related to financial development; economic growth is positively linked with financial development; and real exchange rate is negatively associated with financial development. The Granger causality analysis demonstrates the presence of bidirectional causality between tourism development and financial development as well as a unidirectional causal relationship running from financial development and tourism development to economic growth.
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  • Shahbaz Muhammad & Ramzi Benkraiem & Anthony Miloudi & Aviral Kumar Tiwari, 2019. "Tourism-induced financial development in Malaysia: New evidence from the tourism development index," Post-Print hal-02182288, HAL.
    • Handle: RePEc:hal:journl:hal-02182288
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    Cited by:

    1. Arletta Isaeva & Raufhon Salahodjaev & Anastas Khachaturov & Shakhnoza Tosheva, 2022. "The Impact of Tourism and Financial Development on Energy Consumption and Carbon Dioxide Emission: Evidence from Post-communist Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(1), pages 773-786, March.
    2. Musakwa, Mercy T & Odhiambo, Nicholas M, 2022. "Does tourism influence financial development in Kenya?," Working Papers 29228, University of South Africa, Department of Economics.
    3. Mercy T. Musakwa & Nicholas M Odhiambo, "undated". "Does Tourism Influence Financial Development In Kenya," Working Papers AESRIWP15, African Economic and Social Research Institute (AESRI).
    4. Irfan Ullah Munir & Shen Yue & Abdelmohsen A. Nassani & Muhammad Moinuddin Qazi Abro & Shabir Hyder & Khalid Zaman, 2021. "Structural changes, financial and business regulatory measures, energy and tourism demand: Evidence from group of seven countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 2198-2218, April.
    5. MT Musakwa & N.M. Odhiambo, 2022. "Does Tourism Influence Financial Development in Kenya?," Working Papers AESRI-2022-15, African Economic and Social Research Institute (AESRI), revised Jun 2022.

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