The impact of financial innovation and infrastructure on inbound tourism in Central Asia

Abstract

This empirical study investigates the effect of financial innovation and infrastructure on inbound tourism in Central Asia, along with trade openness as a control variable. This study developed an infrastructure index for Central Asia comprised of different parameters of infrastructure. The data has been assessed for cross-sectional dependence, unit root and coefficients of parameters were obtained by pooled mean group autoregressive distributed lagged model and simultaneous quantile regression. Results show that financial innovation and trade openness have a significant and positive effect on inbound tourism in the long run whereas infrastructure has an insignificant effect. Dynamic stability analysis confirms that the model of the study is stable and will adjust itself from any imbalance within three years of span. The results of quantile regression highlight that financial innovation is positively associated with tourism development in Central Asia irrespective of quantile (Q25, Q50, Q75). Policy implications are provided based on research findings.