The Nonlinear Interaction of Oil Prices, Exchange Rates, and Institutional Quality on Tourist Arrivals in Bangladesh

Abstract

This study investigates the nonlinear effects of oil prices, the exchange rate, and institutional quality on tourist arrivals in Bangladesh. The Nonlinear Autoregressive Distributed Lag (NARDL) approach, which was petitioned for time series data from 1995 to 2019, was used in this study. Crude oil prices and exchange rates have a long-and short-run negative and significant impact on tourism demand, according to the findings, whereas increases in institutional quality are favourably associated with tourist arrivals in Bangladesh. According to the Wald test, there are asymmetries among variables. Negative oil price shocks, positive exchange rate shocks, and poor institutional quality were the factors that had the greatest impact on tourist arrivals, according to all of the dynamic multipliers' estimates. For Bangladeshi politicians and investors, the implications of this study are critical.