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Do tourism receipts affect bank profitability? Analytical evidence from 85 tourism economies

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  • Saif-Alyousfi, Abdulazeez Y.H.
  • Saha, Asish

Abstract

Using data from 17,077 banks in 85 tourism economies during 1995–2016, this study analyzes the impact of international tourism receipts on banks’ profitability and hence financial stability. This study uses two-step system dynamic generalized method of moments estimator techniques to find that the tourism receipts are received through both direct and indirect channels and adversely affect bank profitability. Developing and low-income countries experience the greatest negative impact on profitability. Banks in European countries suffer the highest negative impact, whereas those in the United States are affected the least. Commercial and savings banks experience the highest negative impact of tourism. The findings of the study emphasize prudence in fiscal spending in countries where tourism constitutes a significant part of government revenue. The deleterious impact of COVID-19 on the flow of tourism revenue is likely to affect bank profitability and financial stability of the countries dependent on tourism. Therefore, it is of great significance to policy planners worldwide. The study also opens new vistas for research.

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  • Saif-Alyousfi, Abdulazeez Y.H. & Saha, Asish, 2021. "Do tourism receipts affect bank profitability? Analytical evidence from 85 tourism economies," Research in International Business and Finance, Elsevier, vol. 58(C).
    • Handle: RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921000581
    DOI: 10.1016/j.ribaf.2021.101437
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    More about this item

    Keywords

    Tourism receipts; Bank profitability; 85 tourism economies;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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