Tourism Growth and Financial Sector Development Nexus: Evidence from Selected African Economies

Authors

  • Saganga Kapaya PhD (Finance), MBA (Finance), BA[ED] (Hons), CPA(T), Department of Accounting and Finance, The Open University of Tanzania, Tanzania https://orcid.org/0000-0003-3567-047X
  • Thereza Israel Mugobi PhD (Tourism & Management), MA (Economics & Communication-International Tourism), BA (Tourism & Management); Department of Geography, Tourism and Hospital Services, The Open University of Tanzania, Tanzania

DOI:

https://doi.org/10.32996/jefas.2023.5.3.1

Keywords:

tourism growth, financial sector development, developing countries, Africa, CCEMG

Abstract

This article tests the tourism growth and financial sector development nexus. Data came from the World Bank and IMF for the years 1995-2020 from 43 selected African economies. We applied System GMM and dynamic CCEMG to estimate short–run effects and JKS Granger non-causality test for causality, FMOLS and FGLS to estimate long–run effects and sets of co-integration tests for co-movements. The findings support mutual reinforcing effects for both inbound tourism growth and financial sector development. Outbound tourism should be monitored and controlled for its negative effects; inbound tourism should be facilitated and promoted for its positive effects. Political stability and trade openness policies should be a priority for both sectors, while foreign direct investments should be monitored and controlled for their ambiguous impacts. In this work, we are able to show that increases in international tourism activities and developments in the financial sector mutually impact each other.

Author Biography

  • Saganga Kapaya, PhD (Finance), MBA (Finance), BA[ED] (Hons), CPA(T), Department of Accounting and Finance, The Open University of Tanzania, Tanzania

    Dr Saganga Mussa Kapaya is a senior lecturer and researcher and head of department at the Open University of Tanzania. His current research interests are in Financial development and growth, Financial integration, financial liberalization, financial system theory in connection to tourism development in Africa and developing economies.

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Published

2023-04-28

Issue

Vol. 5 No. 3

Section

Research Article

License

Copyright (c) 2023 Journal of Economics, Finance and Accounting Studies

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

How to Cite

Kapaya, S., & Mugobi, T. I. (2023). Tourism Growth and Financial Sector Development Nexus: Evidence from Selected African Economies. Journal of Economics, Finance and Accounting Studies , 5(3), 01-16. https://doi.org/10.32996/jefas.2023.5.3.1