The Role of Financial Sector Development in the Tourism- Growth Nexus: A Case of Southern African Countries

Kunofiwa Tsaurai

Journal of Economics and Behavioral Studies, 2018, vol. 10, issue 3, 100-110

Abstract: The study explored the impact of financial development on the tourism -growth nexus in Southern African (SADC) countries using the three panel data analysis approaches (pooled OLS, fixed and random effects). Specifically, the study investigated whether financial development is a channel through tourism influences economic growth in SADC countries or if the complementarity between financial development and tourism has a significant positive impact on economic growth in the SADC region? Theoretical and empirical literature review shows that the positive separate impact of tourism and financial development on economic growth is no longer a disputed matter. What has so far not been conclusively studied is whether financial management is a channel through which tourism influences economic growth. It is against this backdrop that the author undertook the current study in order to make a contribution to literature. The study found out that tourism had a significant negative influence on economic growth whereas financial development positively and significantly affected economic growth in the SADC region. The complementarity between tourism and financial development had a positive (fixed effects) and significant positive influence (pooled OLS and random effects) on economic growth in SADC countries, in line with theoretical predictions. SADC countries are therefore urged to improve their financial sector development levels in order to enhance the impact of tourism on economic growth.

Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:rnd:arjebs:v:10:y:2018:i:3:p:100-110

DOI: 10.22610/jebs.v10i3.2320

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