IDEAS home Printed from https://ideas.repec.org/a/rnd/arimbr/v15y2023i3p95-107.html
   My bibliography  Save this article

Financial Risk and International Inbound Tourism: A Malaysian Illustration

Author

Listed:
  • Siti Nurhidayah Mohd Roslen
  • Chua Mei Shan
  • Azlul Kalilah Zaghlol
  • Rafiatul Adlin Hj Mohd Ruslan

Abstract

The impact of financial risk on inbound tourism is explored in this study by examining the effect of shocks in foreign debt level and debt service stability on the tourist arrival rate in Malaysia, based on the Theory of Planned Behavior (TPB). Quarterly data from 2010 to 2020 were obtained from multiple sources, which include the Malaysia Tourism corporate website, the official portal of the Ministry of Economy Malaysia, the Department of Statistics Malaysia, and the Federal Reserve (FRED) Economic statistical website. A VAR model was estimated, together with the Granger causality test, to identify the relationship between financial risk, control variables, and the tourist arrival rate in Malaysia. We specifically consider the effects of financial risk on estimated impulse responses and variance decompositions for the studied variables. Empirical results indicate that there is a unidirectional causality running from foreign debt level stability, debt service stability, and industrial production to tourist arrivals. In addition, there is also bidirectional causality from the effective exchange rate to tourist arrivals and from tourist arrivals to the effective exchange rate. This study is the first of its kind to explore the effect of financial risks in the context of foreign debt levels and debt service stability in Malaysia. The study emphasizes the importance of monitoring the country’s debt financing threshold to maintain financial stability, which if violated would be detrimental to tourism.

Suggested Citation

  • Siti Nurhidayah Mohd Roslen & Chua Mei Shan & Azlul Kalilah Zaghlol & Rafiatul Adlin Hj Mohd Ruslan, 2023. "Financial Risk and International Inbound Tourism: A Malaysian Illustration," Information Management and Business Review, AMH International, vol. 15(3), pages 95-107.
    • Handle: RePEc:rnd:arimbr:v:15:y:2023:i:3:p:95-107
    DOI: 10.22610/imbr.v15i3(SI).3462
    as

    Download full text from publisher

    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/3462/2211
    Download Restriction: no
    File URL: https://ojs.amhinternational.com/index.php/imbr/article/view/3462
    Download Restriction: no
    File URL: https://libkey.io/10.22610/imbr.v15i3(SI).3462?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ponjan, Pathomdanai & Thirawat, Nipawan, 2016. "Impacts of Thailand’s tourism tax cut: A CGE analysis," Annals of Tourism Research, Elsevier, vol. 61(C), pages 45-62.
    2. Lau, Evan & Moll de Alba, Jaime & Liew, Kim-Hing, 2022. "Debt and economic growth in Asian developing countries," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 599-612.
    3. Gurel Cetin & Zaid Alrawadieh & Mithat Zeki Dincer & Fusun Istanbullu Dincer & Dimitri Ioannides, 2017. "Willingness to Pay for Tourist Tax in Destinations: Empirical Evidence from Istanbul," Economies, MDPI, vol. 5(2), pages 1-15, June.
    4. Granger, C. W. J. & Newbold, P., 1974. "Spurious regressions in econometrics," Journal of Econometrics, Elsevier, vol. 2(2), pages 111-120, July.
    5. Fangnan Cui & Yaolong Liu & Yuanyuan Chang & Jin Duan & Jizu Li, 2016. "An overview of tourism risk perception," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 82(1), pages 643-658, May.
    6. Farid Irani & Salih Katircioglu & Korhan K. Gokmenoglu, 2021. "Effects of Business and Finance Conditions on Tourism Firms’ Financial Performances: Evidence From Major Tourist Destinations," SAGE Open, , vol. 11(3), pages 21582440211, August.
    7. Quintal, Vanessa Ann & Lee, Julie Anne & Soutar, Geoffrey N., 2010. "Risk, uncertainty and the theory of planned behavior: A tourism example," Tourism Management, Elsevier, vol. 31(6), pages 797-805.
    8. Xin Long Xu & Chao Sun & Yi Li & Nidi Zhou, 2020. "The Effects of Environmental Management and Debt Financing on Sustainable Financial Growth in the Tourism Industry," SAGE Open, , vol. 10(3), pages 21582440209, August.
    9. Arshian Sharif, Sahar Afshan, 2016. "Tourism Development and Real Effective Exchange Rate Revisited by Wavelet based Analysis: Evidence from France," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 1(2), pages 101-118, October.
    10. Antonakakis, Nikolaos & Dragouni, Mina & Filis, George, 2015. "Tourism and growth: The times they are a-changing," Annals of Tourism Research, Elsevier, vol. 50(C), pages 165-169.
    11. Ramesh Durbarry, 2008. "Tourism Taxes: Implications for Tourism Demand in the UK," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 21-36, February.
    12. Yang, Yang & Zhang, Hongru & Chen, Xiang, 2020. "Coronavirus pandemic and tourism: Dynamic stochastic general equilibrium modeling of infectious disease outbreak," Annals of Tourism Research, Elsevier, vol. 83(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alfano, Vincenzo & De Simone, Elina & D’Uva, Marcella & Gaeta, Giuseppe Lucio, 2022. "Exploring motivations behind the introduction of tourist accommodation taxes: The case of the Marche region in Italy," Land Use Policy, Elsevier, vol. 113(C).
    2. Miguel Orden-Mejía & Mauricio Carvache-Franco & Assumpció Huertas & Wilmer Carvache-Franco & Nathalie Landeta-Bejarano & Orly Carvache-Franco, 2022. "Post-COVID-19 Tourists’ Preferences, Attitudes and Travel Expectations: A Study in Guayaquil, Ecuador," IJERPH, MDPI, vol. 19(8), pages 1-17, April.
    3. Feng Xu & Xuejiao Lin & Shuaishuai Li & Wenxia Niu, 2018. "Is Southern Xinjiang Really Unsafe?," Sustainability, MDPI, vol. 10(12), pages 1-21, December.
    4. Shengxiang She & Yunzhang Tian & Lin Lu & Iveta Eimontaite & Ting Xie & Yan Sun, 2019. "An Exploration of Hiking Risk Perception: Dimensions and Antecedent Factors," IJERPH, MDPI, vol. 16(11), pages 1-14, June.
    5. Romina Alkier & Goran Perić & Sandra Dramićanin, 2022. "Travel Risk Perception in a Health Crisis Caused by the Covid-19 Virus: The Case of Serbia," Central European Business Review, Prague University of Economics and Business, vol. 2022(5), pages 85-107.
    6. Wolff, Katharina & Larsen, Svein & Øgaard, Torvald, 2019. "How to define and measure risk perceptions," Annals of Tourism Research, Elsevier, vol. 79(C).
    7. Hui Zhu & Fumin Deng, 2020. "How to Influence Rural Tourism Intention by Risk Knowledge during COVID-19 Containment in China: Mediating Role of Risk Perception and Attitude," IJERPH, MDPI, vol. 17(10), pages 1-23, May.
    8. Sariişik Mehmet & Ceylan Veli & Kapucuoğlu Mustafa İnanç, 2023. "Impact of the COVID-19 pandemic on travel behavior: A case study of domestic inbound travelers in Turkey," European Journal of Tourism, Hospitality and Recreation, Sciendo, vol. 13(2), pages 211-224, December.
    9. Md. Kamrul Hasan & Ahmed Rageh Ismail & MD. Faridul Islam, 2017. "Tourist risk perceptions and revisit intention: A critical review of literature," Cogent Business & Management, Taylor & Francis Journals, vol. 4(1), pages 1412874-141, January.
    10. Li, Jianping & Feng, Yuyao & Li, Guowen & Sun, Xiaolei, 2020. "Tourism companies' risk exposures on text disclosure," Annals of Tourism Research, Elsevier, vol. 84(C).
    11. Debasish Roy, 2024. "An Exploration in Sustainability and Lifespan of Enterprise: A Cross–Country Empirical Study (2011–2020)," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 5307-5328, June.
    12. Levent, Korap, 2007. "Modeling purchasing power parity using co-integration: evidence from Turkey," MPRA Paper 19584, University Library of Munich, Germany.
    13. Goodall, Amanda H., 2009. "Highly cited leaders and the performance of research universities," Research Policy, Elsevier, vol. 38(7), pages 1079-1092, September.
    14. Wang, Shanchao & Alston, Julian M. & Pardey, Philip G., 2023. "R&D Lags in Economic Models," Staff Papers 330085, University of Minnesota, Department of Applied Economics.
    15. Yap, Wei Yim & Lam, Jasmine S.L., 2006. "Competition dynamics between container ports in East Asia," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(1), pages 35-51, January.
    16. Óscar Bajo Rubio & Carmen Díaz Roldán & Vicente Esteve, 2004. "Is the Fisher Effect Nonlinear? Some Evidence for Spain, 1963-2002," Economic Working Papers at Centro de Estudios Andaluces E2004/05, Centro de Estudios Andaluces.
    17. Nicholas Taylor, 1998. "Precious metals and inflation," Applied Financial Economics, Taylor & Francis Journals, vol. 8(2), pages 201-210.
    18. Md. Sharif Hossain & Md. Thasinul Abedin, 2016. "Multivariate Dynamic Co-integration and Causality Analysis between Inflation and its Determinants," Journal of Economics and Behavioral Studies, AMH International, vol. 8(5), pages 240-250.
    19. Lego, Brian & Gebremedhin, Tesfa & Cushing, Brian, 2000. "A Multi-Sector Export Base Model of Long-Run Regional Employment Growth," Agricultural and Resource Economics Review, Cambridge University Press, vol. 29(2), pages 192-197, October.
    20. R. Santos Alimi, 2014. "ARDL Bounds Testing Approach to Cointegration: A Re-Examination of Augmented Fisher Hypothesis in an Open Economy," Asian Journal of Economic Modelling, Asian Economic and Social Society, vol. 2(2), pages 103-114, June.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arimbr:v:15:y:2023:i:3:p:95-107. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Muhammad Tayyab (email available below). General contact details of provider: https://ojs.amhinternational.com/index.php/imbr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.