Nexus between Economic Growth, Tourism Revenue and Financial Development in Bangladesh: A Time Series Analysis

Abstract

The main objective of this study is to analyze the nexus between economic growth, tourism revenue, and financial development in Bangladesh. This paper uses time series data from 1995 to 2016. Advance technique of time series analysis: Johansen Cointegration Approach is used to test the Cointegration among variables. Moreover, the Vector Error Correction (VECM) has been applied to study the long run and short run association among variables. The outcome of this study reveals that the tourism revenue and financial development has positive impact on economic growth in the long run. Variance decomposition and impulse response function also supports the positive association. According to the estimation of Granger Causality also reveals the unilateral direction in short run economic growth to tourism revenue. Providing more credit by financial sector to invest more on infrastructure and promoting Bangladesh as well as insuring proper security for foreign visitors would increase the revenue of this sector, which in turn stimulates economic growth of the country.