Financial development and tourism: a century of evidence from Germany

Sefa Awaworyi Churchill, Yifei Cai, Michael Odei Erdiaw-Kwasie, Lei Pan

Research output: Contribution to journalArticlepeer-review


This article presents findings from the first study to examine the direct effects of financial development on tourism. Using a unique historical dataset for Germany covering 1870 to 2016, we apply an autoregressive distributional lag (ARDL) model with structural breaks. To identify the lead–lag relationship between financial development and tourism, we adopt the wavelet coherence method and the most recently developed Shi, Hurn, and Phillips (2020) time-varying causality test. The ARDL results suggest that, on average, financial development is associated with an increase in tourist arrivals. The wavelet coherence results unveil a significant positive correlation between financial development and tourism in both short- and medium-terms, and financial development leads to tourism growth in Germany. Moreover, the causality results indicate that the positive effect of financial development on tourism is most evident from 2009 onward. Our study provides important implications for policymakers.
Original languageEnglish
Pages (from-to)305-318
Number of pages14
JournalApplied Economics
Issue number3
Publication statusE-pub ahead of print - 20 Jun 2022

Bibliographical note

Funding Information:
We thank the anonymous referee for the insightful comments, which helped to improve the quality and readability of the article. All the remaining errors are our own.

Publisher Copyright:
© 2022 Informa UK Limited, trading as Taylor & Francis Group.


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