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Exchange Rate Volatility and Tourist Arrivals from Asean to Malaysia

In: Quantitative Analysis of Social and Financial Market Development

Author

Listed:
  • Eliza Nor
  • Tajul Ariffin Masron
  • Xiang Hu

Abstract

This study analyzes the impact of exchange rate volatility (ERV) on inbound tourist arrivals from four ASEAN countries namely Indonesia, the Philippines, Singapore, and Thailand during 1970–2017. Volatility in the exchange rates between the tourist currency and ringgit Malaysia is measured using the Generalized Autoregressive Conditional Heteroskedasticity model. The results from Autoregressive Distributed Lagged models indicate that ERV has no significant impact on tourist arrivals from ASEAN to Malaysia. This implies that tourists from these countries may not be sensitive to ERV when choosing Malaysia as their travel destination. There are two possible explanations for the results. First, Malaysian ringgit has been depreciating against major currencies and regional currencies in recent years, which makes ringgit relatively cheaper than other ASEAN currencies. Second, the empirical results of the study support the argument that ERV has a more serious impact on tourist spending compared to tourist arrivals.

Suggested Citation

  • Eliza Nor & Tajul Ariffin Masron & Xiang Hu, 2022. "Exchange Rate Volatility and Tourist Arrivals from Asean to Malaysia," International Symposia in Economic Theory and Econometrics, in: Quantitative Analysis of Social and Financial Market Development, volume 30, pages 17-34, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-038620220000030002
    DOI: 10.1108/S1571-038620220000030002
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    More about this item

    Keywords

    Tourist arrivals; Malaysia; ASEAN-4; exchange rate volatility; GARCH model; ARDL; Z32;
    All these keywords.

    JEL classification:

    • Z32 - Other Special Topics - - Tourism Economics - - - Tourism and Development

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