Does financial inclusion promote tourism development in advanced and emerging economies?

Abstract

ABSTRACT This research article is the first of its kind to consider the financial inclusion, which is constructed using the depth, access and efficiency of the financial institutions and markets, and various aspects of tourism development such as business tourism spending, direct tourism contribution, domestic tourism spending, total internal tourism expenses, leisure tourism spending and total tourism contribution. Given the growing importance of financial inclusion in the recent time, this article is designed to investigate the role of financial inclusion on various dimensions of tourism development across the panels of 24 advanced and 21 emerging economies around the world, using yearly data from 1995 to 2016. Given the presence of cross-sectional dependence in the data series, we employ Augmented Mean Group (AMG) estimator as it is a robust technique to handle this issue in the estimation. The evidences show that financial inclusion has a significant positive impact on various aspects of tourism development across the panels. The results also suggest that the impact is more in emerging economies than that of advanced economies. Hence, this article offers numerous policy and practical suggestions for sustainable tourism management.