Does Financial Development, Governance and Oil Price Promote Tourism Demand in OIC Counties: Evidences from Quantile Regression

This study analyzed the heterogeneity and nonlinear effects of financial development, governance, real exchange rate and oil price on tourism in OIC countries. We used annual panel data of 50 Islamic countries from 1996 to 2019 and apply panel quantile regression as well as pooled and fixed effect technique. The empirical results illustrated that across quantiles, financial development contributed to the tourism performance in all models under review. We also observed that the impact of governance indicators on tourism demand were positive and statistically significant. The estimated asymmetric model affirmed the positive effect with the weak significant power of oil price on tourism at across quantiles (except 10th), while exchange rate was negatively associated with tourism demand. Furthermore, the results of slope equality test indicated that, in many models, the relationship between tourism demand and explanatory variables was clearly heterogeneous. Finally, the asymmetric effects at different quantiles for more coefficients based on the quantile plot were confirmed.