Could tourism investments influence financial inclusion in the European Union countries?

ABSTRACT

This investigation approaches the bidirectional relationship between tourism investments and financial inclusion. Principal component analysis was employed to obtain the financial inclusion index, and the panel vector autoregressive model was applied to analyze a panel of 25 European Union countries from 2005 to 2020. The empirical findings indicate a bidirectional and negative relationship between tourism capital investment and financial inclusion. Additionally, the outcomes reveal that both tourism capital investment and ICT diffusion positively affect economic growth and that financial inclusion negatively affects the economic growth of EU countries. In turn, economic growth promotes financial inclusion. Furthermore, financial inclusion enhances ICT dissemination, while tourism capital investment is linked to decreased ICT expansion. These outcomes indicate that policymakers and financial institutions must navigate this intricate landscape, devising strategies that bolster financial inclusion and support the tourism sector rejuvenation, recognizing the pivotal role both play in fostering a resilient and inclusive economy.

Highlights

• The relationship between tourism investments and financial inclusion is empirically investigated.

• Tourism capital investment and financial inclusion negatively affect each other.

• Implementing technological and tourism investment policies is mandatory for enhancing financial inclusion.

KEYWORDS:

• Tourism capital investment
• Financial inclusion
• European union
• Principal component analysis
• Panel vector autoregressive

JEL CLASSIFICATION:

• C01
• G20
• O16
• Z32

Acknowledgments

The authors acknowledge financial support from the national funds through FCT – Fundação para a Ciência e a Tecnologia, I.P., through project UIDB/05037/2020 with DOI 10.54499/UIDB/05037/2020; and by the FCT – Fundação para a Ciência e a Tecnologia, I.P., PhD fellowship [2022.13300.BD].

Disclosure statement

No potential conflict of interest was reported by the author(s).

Author contributions

D.C.: Conceptualization; Data curation; Formal analysis; Investigation; Methodology; Visualization; Roles/Writing – original draft. J.A.F: Investigation; Supervision; Validation; Writing – review & editing. All authors have read and agreed to the published version of the manuscript.

Data availability statement

Data is available on request from the corresponding author.

Notes

1 The internet and other systems facilitating the exchange of information among individuals electronically.

2 The effectiveness of diverse computerized products or systems lies in their seamless ability to effortlessly connect and share information with each other, both in terms of execution and accessibility, without limitations.

Additional information

Funding

This work has been funded by national funds through FCT – Fundação para a Ciência e a Tecnologia, I.P., through project UIDB/05037/2020 with DOI:10.54499/UIDB/05037/2020; and by the FCT – Fundação para a Ciência e a Tecnologia, I.P., PhD fellowship [2022.13300.BD].