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Nexus between environmental sustainability, good governance, financial inclusion, and tourism development in Bangladesh: Evidence from symmetric and asymmetric investigation

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Over the past decade, tourism’s contribution to economic Section progress has emerged as an alternative avenue for socio-economic development, especially in the productive economy with natural beauty. On the other hand, the potential effects of tourism on the environment have also been unveiled in the literature, along with macroeconomic misbehavior due to erratic environmental changes. However, the study’s impetus is to inspect the reaction of tourism contribution to Bangladesh’s economy from 1991–2019 with ecological sustainability, good governance, and financial inclusion in the empirical assessment. With the implementation of both linear and non-linear frameworks, the present study has explored the elasticities of core explanatory variables on explained variables; for directional causality, the novel Fourier Toda and Yamamoto causality test has been executed. According to the combined cointegration test, Bangladesh has a long-run association between environmental sustainability, good governance, financial inclusion, and tourism development. Inferring from long-run symmetric and asymmetric cointegration, the test statistics revealed statistically significant at a 1% level, suggesting the long-run relations in the established empirical model. Considering the linear autoregressive disoriented lagged, the study established a negative and statistically significant linkage between environmental sustainably and tourism contribution, suggesting that the excessive inflows of carbon emission that environmental degradation dwindles the progress of tourism contribution. Whereas a positive and statistically significant influence runs from good governance and financial inclusion to tourism development, the suggestion of easy access to financial services and effective institutional activities prompts tourism activities, especially in the long-run. The asymmetric investigation established non-linearity in the empirical model for the long and short-run. In terms of asymmetric coefficients, the study unveiled the positive and negative shocks of environmental sustainability exposed negatively and statistically significant. In contrast, the asymmetric shocks of financial inclusion and good governance established positive and statistically substantial Bangladesh tourism development in the long and short-run. The directional causality assessment revealed bidirectional causality running between explanatory variables to tourism development.
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Nexus between environmental
sustainability, good governance,
nancial inclusion, and tourism
development in Bangladesh:
Evidence from symmetric and
asymmetric investigation
Yeasmin Islam, Piana Monsur Mindia, Nusrat Farzana and
Md Qamruzzaman*
School of Business and Economics, United International University, Dhaka, Bangladesh
Over the past decade, tourisms contribution to economic Section progress has emerged
as an alternative avenue for socio-economic development, especially in the productive
economy with natural beauty. On the other hand, the potential effects of tourism on the
environment have also been unveiled in the literature, along with macroeconomic
misbehavior due to erratic environmental changes. However, the studysimpetusisto
inspect the reaction of tourism contribution to Bangladeshseconomyfrom
19912019 with ecological sustainability, good governance, and nancial inclusion in
the empirical assessment. With the implementation of both linear and non-linear
frameworks, the present study has explored the elasticities of core explanatory
variables on explained variables; for directional causality, the novel Fourier Toda and
Yamamoto causality test has been executed. According to the combined cointegration
test, Bangladesh has a long-run association between environmental sustainability, good
governance, nancial inclusion, and tourism development. Inferring from long-run
symmetric and asymmetric cointegration, the test statistics revealed statistically
signicant at a 1% level, suggesting the long-run relations in the established empirical
model. Considering the linear autoregressive disoriented lagged, the study established a
negative and statistically signicant linkage between environmental sustainably and
tourism contribution, suggesting that the excessive inowsofcarbonemissionthat
environmental degradation dwindles the progress of tourism contribution. Whereas a
positive and statistically signicant inuence runs from good governance and nancial
inclusion to tourism development, the suggestion of easy access to nancial services and
effective institutional activities prompts tourism activities, especially in the long-run. The
asymmetric investigation established non-linearity in the empirical model for the long and
short-run. In terms of asymmetric coefcients, the study unveiled the positive and
negative shocks of environmental sustainability exposed negatively and statistically
signicant. In contrast, the asymmetric shocks of nancial inclusion and good
governance established positive and statistically substantial Bangladesh tourism
development in the long and short-run. The directional causality assessment revealed
bidirectional causality running between explanatory variables to tourism development.
KEYWORDS
environmental sustainability, good governance, nancial inclusion, tourism development,
autoregressive disoriented lagged, nonlinear autoregressive disoriented lagged,
Bangladesh I
OPEN ACCESS
EDITED BY
Haiyue Liu,
Sichuan University, China
REVIEWED BY
Iwona Bąk,
West Pomeranian University of
Technology, Poland
Md Shabbir Alam,
University of Bahrain, Bahrain
*CORRESPONDENCE
Md Qamruzzaman,
zaman_wut16@yahoo.com
SPECIALTY SECTION
This article was submitted to Environmenal
Economics and Management,
a section of the journal
Frontiers in Environmental Science
RECEIVED 28 September 2022
ACCEPTED 27 December 2022
PUBLISHED 02 February 2023
CITATION
Islam Y, Mindia PM, Farzana N and
Qamruzzaman M (2023), Nexus between
environmental sustainability, good
governance, nancial inclusion, and
tourism development in Bangladesh:
Evidence from symmetric and
asymmetric investigation.
Front. Environ. Sci. 10:1056268.
doi: 10.3389/fenvs.2022.1056268
COPYRIGHT
© 2023 Islam, Mindia, Farzana and
Qamruzzaman. This is an open-access
article distributed under the terms of the
Creative Commons Attribution License
(CC BY). The use, distribution or
reproduction in other forums is permitted,
provided the original author(s) and the
copyright owner(s) are credited and that
the original publication in this journal is
cited, in accordance with accepted
academic practice. No use, distribution or
reproduction is permitted which does not
comply with these terms.
Frontiers in Environmental Science frontiersin.org01
TYPE Original Research
PUBLISHED 02 February 2023
DOI 10.3389/fenvs.2022.1056268
1 Background of the study
The economic advantages of tourism to a nation or a province,
state, department, municipality, or another local region within a
country consist of sales and output, labor wages, and employment.
Tourism is the actions of individuals going to and staying in locations
outside their customary environment for less than 1 year for pleasure,
business, or other objectives(Carrascal Incera and Fernández, 2015).
Tourists provide vital funds to local businesses, governments, and
citizens; moreover, companies that service visitors and those that
supply them are crucial to the local economy, and its executives,
authorities, employees, and dependents must recognize this to make
informed private and public policy choices (Wang et al., 2022).
Tourism boosts local economies by creating jobs and generating
revenue via increased output and visitor spending. The tourist
multiplier is the total increase in output, labor pay, and
employment in a region due to interindustry links. The economic
impact of tourism is measured by a multiplier,which directly affects
the number of money tourists spend in a certain area (Li and
Qamruzzaman, 2022a;Xiao and Qamruzzaman, 2022).
The importance of the tourism industry to the economy has grown
in recent decades, and so has the number of foreign tourists. The
World Travel and Tourism Council estimates that As a result of
continued limits to mobility, the travel and tourism sectors
contribution to the global GDP will drop from 10.3% in 2019% to
5.3% in 2020, even though it contributed 10.3% in 2019. In 2021, the
share reached 6.1% after having previously been at 5.9%. In addition,
the revenue from tourism has provided an additional channel for
exports, which has aided the balance of payments in many countries.
Prots from tourism have grown into a signicant industry,
contributing to a rise in the number of people employed, the
purchasing power of families, and tax revenue collected by
governments throughout the world. Regarding tourisms nexus to
several economic, the study documented two vines of evidence in the
literature. First, the positive association that tourism development
accelerated economic growth (Alam, 2022a;Toubes and Araújo-Vila,
2022;Wu et al., 2022a;Wu et al., 2022b), nancial development
(Kumar, 2014), foreign direct investment (Arain et al., 2020), capital
formation, poverty reduction and human capital development
(Thrane, 2008). The second line of empirical studies has explained
the destructive nature of tourism development in the economy
through environmental degradation by increasing carbon emissions
(Liu et al., 2011). However, in terms of tourism growth determents, the
existing literature has exposed several economic factors that positively
inuence tourisms contribution to the economy, such as foreign
direct investment (Ivanovic et al., 2011). There is ample evidence
that tourism benets host communities directly and indirectly by
generating new products and services, increasing local economies, and
generating new revenue streams (Archer and Fletcher, 1996).
However, some of these benets could have unintended negative
effects on other people and production variables (Hassan et al.,
2022). The economys structure (the volume of imports required in
the manufacturing process) and the commodities purchased by
visitors inuence the leakage. Understanding how tourist spending
impacts labor and capital revenues distribution to the various
socio-economic actors is crucial to properly account for
distributional effects (Wattanakuljarus and Coxhead, 2008).
The present study has considered environmental sustainability,
nancial inclusion, and good governance in tourism development.
According to existing literature, the nexus between tourism-led
environment has produced one directional investigation in most
cases which is the impact of tourism development on the
environment and documented adverse association, suggesting that
the detrimental role of tourism in the process of environmental
degradation (Raza et al., 2017;Shahbaz et al., 2021;Teng et al.,
2021); Villanthenkodath et al., (2022b), however, the positive
effects of tourism on carbon reduction has established in the
literature as well (Tong et al., 2022). The role of institutions and
economic freedom in explaining observed economic growth and
performance disparities is an important study area. The economic
literature has shifted from focusing on inputs and technology to a
wider understanding of growth conditions (Gwartney et al., 1999).
Good governance is required to provide (Dixit, 2009) the protection of
property rights, the enforcement of contracts, and collective action.
According to Khan et al., (2021), the benecial effects of good
governance stem mostly from two sources. First, it decreases
transaction costs, making markets more efcient. Second, excellent
governance allows markets to overcome persistent market
shortcomings in distributing assets, obtaining productivity-
enhancing technology, and preserving political stability in
circumstances of rapid societal transition.
Financial inclusion allows businesses and entrepreneurs in the
tourist industry to access ofcial nancing sources and bolster the
money they need for their endeavors. According to Ayyagari et al.,
(2011), having access to nancial resources is directly connected to the
phenomenon of innovation, which, in turn, drives economic
development via an increase in productivity. In developing nations
with prevalent bank-based nancial systems, bank-based nancial
inclusion signicantly simplies the process of nancial inclusion.
It contributes to a more rapid acceleration of economic development
via inclusive growth (Dai et al., 2022). Furthermore, mobile payment
systems have made signicant strides toward global adoption in the
recent decade. As the mobile phone has become an indispensable
component of an individuals day-to-day existence, it has grown more
ingrained in their travel experiences in recent years. Through nancial
inclusion, travelers are given much-needed access to mobile payment
systems, allowing them to hassle-free pay for the travel-related goods
and services they purchase (Yang et al., 2021). Additionally, small and
medium-sized businesses (SMEs) in the tourist industry with access to
money and giving people access to mobile payments and transfers are
two crucial components of a sustainable tourism development
strategy, especially in developing nations. Low and middle-income
small and medium-sized enterprises (SMEs) in the tourist industry
rely heavily on backward and forward connections to the global value
chains in the industry, and this is only possible with access to nancing
(Alam et al., 2022c).
The potential contribution of the study is as follows; rst, it refers
to the nexus between environmental degradation and tourism; existing
literature predominately focuses on tourisms impact on the
environment; however, the potential role of environmental
sustainability, which is the reduction of carbon emission on
tourism development, has yet to investigate extensively. On this
note, the present study has implemented the empirical relationship
between environmental sustainability and tourism development to
document the possible effects on tourism contribution. Second,
according to the literature, easy access to nancial services, efcient
nancial intermediation, and good governance have positively
inuenced tourism. On the other hand, the possible effects of
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Islam et al. 10.3389/fenvs.2022.1056268
environmental degradation on tourism have yet to be extensively
investigated and completely ignored in terms of tourism
development in Bangladesh. The study intended to mitigate the
literature gap by exploring fresh insight. Third, it is apparent in the
existing literature that nancial development and good governance
inuenced environmental quality; thus, the present study
considered the interactive term between ecological sustainability
and nancial inclusion (ES*FI) and environmental sustainability
and good governance (ES*GG) for documenting the mediating
effect on tourism development.
Conferring to the study ndings, it is obvious that tourism
development in Bangladesh relies on environmental quality
improvement, suggesting that carbon emissions cause ecological
degradation, which leads to a negative impression of tourism
progress. On the other hand, the connection between nancial
inclusion, good governance, and tourism development has been
exposed positively and statistically signicant, indicating that
nancial inclusion is easy to access nancial services from nancial
institutions, and efcient nancial intermediation entices
international tourism arrivals; as a result, the process of tourism
development has intensied. For good governance, it is conrmed
an ambiance for political stability and institutional effectiveness,
accelerating tourism development trends by protecting tourists
interests. The asymmetric investigation established non-linearity in
the empirical model for the long and short-run. In terms of
asymmetric coefcients, the study unveiled the positive and
negative shocks of environmental sustainability exposed negatively
and statistically signicant. In contrast, the asymmetric shocks of
nancial inclusion and good governance established positive and
statistically substantial Bangladesh tourism development in the long
and short-run. The directional causality assessment revealed
bidirectional causality between explanatory variables and tourism
development.
The remaining structure of the paper is as follows: The literature
survey and hypothesis development are available in Section II. The
variables denition and methodology of the study are explained in
Section III. Section IV deals with the mode of estimation and
interpretation. Discussion of the study is reported in Section V.
nally, the conclusion and policy implications are exhibited in
Section VI.
2 Literature survey
The tourism literature has mostly focused on questions about the
link between economic expansion and the expansion of the tourism
industry. Increasing tourists means more money and jobs, which may
boost a countrys economy. The tourist-led growth (TLG) concept,
popularized by (Balaguer and Cantavella-Jordá, 2002), is only one-way
tourism inuences economic development. Regarding tourism
development, two studies have been initiated, that is, the impact of
tourism on several economic factors and the determinants of tourism
development.
2.1 Environmental sustainability and tourism
The nexus between tourism and environmental sustainability,
inferring the existing literature, is the domain of study ndings
available. First, a growing number of studies have revealed a
detrimental role of tourism development in the economy is
environmental degradation (Raza et al., 2017;Sharif et al., 2020;
Teng et al., 2021;Andriamahery and Qamruzzaman, 2022;
Villanthenkodath et al., 2022a;Li and Qamruzzaman, 2022b;Ma
and Qamruzzaman, 2022;Xia and Qamruzzaman, 2022). For example,
in the case of India (2022a) exploded the role of tourism development
in the process of losing the environmental quality with the application
of ARDL bound testing approach for the period 1995Q12018Q4. The
study documented a positive and statistically signicant association
between tourism development and the level of carbon emission into
the ecosystem, suggesting the contributory role of tourism
development in environmental degradation. Further evidence in the
study of Villanthenkodath et al., (2022a) shows that an increase in
tourism negatively inuences ecological quality. Still, a shift in the
economys basic structure has a positive impact, and a break in the
series implies that tourism has very little effect on carbon emissions.
Moreover, the study has established that economic expansion
improves environmental quality. However, the usage of energy is
found to decrease the ecological rate. Many international
organizations and institutions have produced reports highlighting
the potential positive effects sustainability may have on tourist
development and the processes related to the economic growth of
destinations. These organizations have tried to justify why vacation
spots should put money into becoming more environmentally
friendly. UNEP found in 2011 that the tourism industry was more
interested in investing in environmental sustainability. In another
UNWTO report, sustainable tourism is called an instrument to
support economic and social improvement(2013: 12). For its part,
the Global Sustainable Tourism Council is working to show that eco-
friendly tourism is protable by minimizing damage to natural areas,
boosting the local economy, and protecting irreplaceable cultural relics
(Gharib et al., 2022).
The term environmental qualitydescribes how well-maintained
the areas natural characteristics are and how easily they can be
damaged by human activity (Mihalič, 2000). The connection
between tourism and the natural world is frequently disregarded as
irrelevant and seldom subjected to in-depth study. Despite this, it is
obvious that peoples perspectives on the environment have
undergone signicant shifts with time, particularly concerning
tourism and numerous other facets of human growth (Butler,
2000). Regarding a nations overall economic health, the tourism
industry is crucial. However, the tourist sector and the
environment are increasingly interrelated. The success of the
tourist business depends on the natural and built environments
being in good condition. Even though tourism may benet the
environment, the two are frequently considered independent
(Rabbany et al., 2013). The inuence on the environment, which
has both favorable and unfavorable elements, is constantly evolving
due to the ongoing growth of tourism. There are many different ways
in which tourism can contribute to the preservation of the natural
environment. Tourism can safeguard endangered areas and the
natural environment. Visitorsentrance fees can maintain and
manage ecologically complex regions. Further, governments may
collect the funds they need for environment management via
charges, tax payments, taxes on the sale or rental of leisure
equipment, and royalty payments for events like hunting and
shing. This revenue can be utilized toward various
comprehensive preservation initiatives and activities, such as
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Islam et al. 10.3389/fenvs.2022.1056268
paying park ranger salaries and the upkeep of park facilities
(Camarda and Grassini, 2003). Tourism has the potential to
signicantly contribute to the protection of the environment,
the preservation and restoration of biological diversity, and the
responsible use of natural resources. It is possible that national
parks and wildlife preserves would be established to protect natural
areas and pristine landscapes because of their aesthetic value
(Hamid et al., 2022).
Even though tourism has a benecial effect on economic
expansion, it also signicantly affects CO2 emissions. The more
appealing a destination is (typically as a result of its great
biological or cultural values), the more likely it is to become
popular, and the greater the likelihood that it will become
degraded as a result of heavy visitation, which may result in a
decrease in the overall quality of the experience (Hillery et al.,
2001). Environmental costs are associated with tourism, including
transportation, attractions, and hotels. These costs include pollution
from tourist trafc, rude conduct from visitors, and excessive energy
use. (Zhao and Min Li, 2018). According to (Rabbany et al., 2013),
some direct environmental impacts are affected by a countrys tourism
sector. To name a few: deteriorating water and air quality, excessive
noise pollution, excessive solid waste and littering, altered and
fragmented ecosystems, effects on animals, impacts on aesthetics
and culture, loss of biological variety, ozone depletion, and climate
modication. In modern economies, private amenity construction
inside public protected areas threaten conservation as a result of
tourism. In underdeveloped nations, tourism is utilized to fund
conservation initiatives in public and privately maintained or
communal areas (Buckley, 2011).
The previously described negative consequences of tourism on the
environment not only harm or disturb the natural and cultural
resources upon which tourism development relies but also
inuence touristsexperiences. This brings up the challenge of
improving touristsexperience while reducing the damage they
cause to the surrounding environment (Zhong et al., 2011). The
tourist sector has already started preparing to lessen the impact of
its activities. This includes industry- and government-led initiatives,
nancial contributions, enhanced environmental planning and
management, public education and outreach campaigns, and
stricter preservation, protection, and disclosure mandates (Rabbany
et al., 2013). In addition (Paramati et al., 2017), found that the
environmental damage in Western Europe is lessened because of
tourism. The introduction of environmentally friendly technology
and ecologically responsible tourist activities were highlighted as
potential sources of tourisms ameliorative inuence on
environmental deterioration. According to (Zhong et al., 2011), the
natural and social/cultural settings signicantly determine how
successful a destinations tourist industry will be. Therefore, it is of
the utmost importance to maintain or even increase the quality of the
tourist environment at a given site. Pollution can degrade the
attraction of natural elements such as spectacular landscapes,
biological hydrologic structures, clean water, healthy air, and
wildlife (Mihalič, 2000).
This should not be used as an excuse to disregard the importance
of environmental quality in a more general sense. Generally, tourists
will not return to polluted, unclean, or unpleasant sites if comparable
alternatives are available at similar prices (Butler, 2000).
Environmental quality is an important part of perceived quality,
which is a crucial variable for customers because it can
signicantly inuence the likelihood of re-visiting and boost the
protability and attractiveness of tourism destinations. According
to (Sadat and Chang, 2016), there is a signicant connection
between the environments quality and the satisfaction level
experienced by tourists. Therefore, increased tourist satisfaction
and favorable impressions of the surrounding environment would
benet the likelihood of a return visit.
H1Environmental Sustainability augments tourism development
2.2 Financial inclusion and tourism
development (literature review)
Access to institutional funding, such as bank loans, may help
tourism-related rms and entrepreneurs grow and thrive. Access to
capital, according to Ayyagari et al. (2011), is a direct result of a
countrys rate of innovation, which in turn drives access to capital via
an increase in productivity. In emerging countries with mostly
banking nancial systems, bank-based nancial inclusion is a
signicant enabler of nancial inclusion, accelerating economic
development through inclusive growth (Swamy, 2012). Over the
last 10 years, there has been an explosion in the use of mobile
payment systems. Because mobile phones have become so
pervasive in peoples everyday lives, they have also become an
integral part of the way that people travel. It is crucial to have a
variety of mobile payment methods available for tourists so that they
may purchase products and services while they are traveling. Financial
inclusion (FI) has been highlighted as a growth-promoting element for
emerging nations. (Abubakar et al., 2020). According to (Girón et al.,
2021), a greater degree of nancial inclusion raises the amount of
ofcial savings in nations, which boosts their growth. The concept of
nancial inclusion reects that the development of any economy is
contingent on individuals from all socioeconomic levels having access
to banking and other nancial services. Over the past few decades,
nancial and banking regulators, governments, and academia have all
paid close attention to nancial inclusion. It is now one of the essential
pillars of sustainable development. (Carrillo-Hidalgo and Pulido-
Fernández, 2016;Qamruzzaman and Wei, 2019b).
As far as we know, most researchers concentrate on how tourism
affects nancial inclusion (Carrillo-Hidalgo and Pulido-Fernández,
2019b). Stated tourism is one of the most important weapons for
assuring economic growth, improving the quality of life, and
eliminating poverty and inequality in developing countries. This
study examined the World Banks role in inclusive tourism
nancing as a sustainable development strategy. Through a
descriptive analysis of more than 92 projects in different elds,
they found that the World Banks tourism funding could benet
from a stronger emphasis on nancial inclusion, allowing it to more
efciently and effectively achieve its goals of reducing poverty and
fostering development (Panggabean and Sipahutar, 2019).
Demonstrates how the tourism sector may promote economic
growth by providing a range of job possibilities and generating
foreign revenue in Indonesia, which is then utilized to stimulate
other economic activities. They stated that tourism promotes the
usability of local products and focuses on developing local
communities, thus ensuring nancial inclusion. Financial and social
inclusion are impacted by tourism (Kumar et al., 2020).
Shi et al., (2020) claim that low-income families benet greatly
from gender-sensitive nancial inclusion. Similarly, the economic
Frontiers in Environmental Science frontiersin.org04
Islam et al. 10.3389/fenvs.2022.1056268
prosperity of low-income families in the regions around tourist
locations benets greatly from a tourism business that considers
gender. The importance of nancial inclusion in the growth of
sustainable tourism is growing. Non-etheless, there are no studies
examining the relationship between nancial inclusion and the
expansion of the tourism sector in the existing empirical research.
However, very few works of literature concentrate on the opposing
notion that it is essential to ensure nancial inclusion to boost tourism.
Financial inclusions effect on tourist growth was studied (Shi et al.,
2020) using data from 19952016 from 24 developed and
21 developing countries. The ndings, which feature policy
recommendations and useful ideas, demonstrate that nancial
inclusion has a major effect on various facets of tourism growth.
The results also suggest that the impact is signicantly magnied in
emerging and developed markets (Carrillo-Hidalgo and Pulido-
Fernández, 2016). Have proposed a technique for determining if
the performance of International Financial Institutions regarding
tourism nancing is inclusive. Promoting nancial inclusion is
essential if tourism is a driver of economic growth. According to
their research, while nancial intermediaries fund governments and
large businesses, none of these institutionsnancing practices,
nancing volumes, or non-nancial actions promote nancial
inclusion for the poor. Financial inclusion in sustainable wealth
creation for developing and developed countries was studied using
the GMM model (Gao et al., 2022). The results demonstrate that
nancial inclusion affects various elements that contribute to the
expansion of Chinas tourism sector. Raising peoplesnancial
literacy and strengthening the security of technologically-based
nancial instruments are other effective means of facilitating
nancial inclusion. Promoting rural tourism may be seen as one of
the most crucial factors in extending nancial inclusion, alongside
agricultural development (Singh, 2022). This article will investigate the
factors that motivate nancial inclusion and ensure long-term tourism
development in Bangladesh. To that end, we hypothesize that the
nancial inclusion indexwhich measures factors including the
availability, development, and performance of nancial institutions
and marketshas a salutary impact on the travel industry. This is
because the elimination of credit and liquidity limitations for tourist
sector players is a direct result of improved access to nancial
institutions and markets. Therefore, these parties may purchase
tourism-related products and services at reduced costs.
H2Financial inclusion positively inuences tourism development.
2.3 Good governance and tourism
development
A countrys tourism growth can be quantied using an index that
considers both inbound and outbound tourist spending and the
sectors contribution to total employment. Good governance is
characterized by government efciency, political stability,
high-quality rules, the rule of law, citizen participation, and
individual accountability (Khan et al., 2021). Governance aims to
maintain a good relationship between the rulers and the ruled. Even
though most academics interchangeably refer to both governance and
good governance, good governance is crucial for accomplishing long-
term development objectives. Accountability and transparency, the
absence of violence and political stability, the efcacy of governmental
policy, the eradication of corruption, the standard of governance, and
the formation of the rule of law are the six factors that support good
governance in every community (Ali, 2015).
Shortly, governance will surely take center stage in the
development and policy of tourism destinations. The ndings of
this research highlight the importance of using independent
categorical variables to aid in the creation and evaluation of
explanatory claims, the explanation of conceptual statements, and
the promotion of comparative analysis and policy learning.
Furthermore, it has established connections between the literature
on governance in political science and public policy and the specic
challenges faced by the tourism sector. The relationship between
policy actors and steering modes, as well as the balance between
state intervention and self-regulation, serve as the basis for the
categorical variables in this study. The resulting matrix identies
four different governance systems, including hierarchies, markets,
networks, and communities. Rather than occurring in a vacuum,
tourism governance must be viewed as operating within particular
frameworks or representations of governance (Hall, 2013).
Social capital, political capital, and their interplay determine the
importance of governance and long-term tourism sustainability
(Nunkoo, 2017). In contrast to neoclassical philosophy, which
stresses and is limited to market links, good governance notions
acknowledge the importance of non-market forces, such as local
communities and civil society, to the development process.
Governance frameworks encourage local communities and civil
society, usually excluded from tourism policymaking, to participate
in tourism planning as legitimate partners. The author concludes that
trust and power should cooperate rather than act alone. The
synergistic view of social capital can positively affect sustainable
tourism development and governance by altering formal
institutions and the rule of law.
(Khan et al., 2021) used data from the World Development
Indicators (WDI) to demonstrate that governance favors tourism
development and its constituent parts. Additionally, it is found that
all governance metrics encourage the growth of the tourism industry.
On the other hand, tourism in developing nations is severely harmed
by terrorism, environmental degradation, and corruption. However,
trade openness and tourism have a good association. The comparative
study by (Daryaei et al., 2012)between OECD nations and developing
countries reveals that the OECD countries are ahead of developing
countries in various good governance indexes, which is the cause of the
rising visitor numbers in these countries. A signicant impact is
created on the countrys tourism industrys growth through strong
governance established by the study.
To be effective, a set of tourism policies must be conceptually and
thematically solid and founded on the realities of existing and
forthcoming issues. The 2010 Bangladesh Tourism Policy, however,
is not as well written. This study emphasizes the importance of the
governments commitment to the development of the policy-
motivated tourism industry in the country, with active
participation from the private sector and non-prot organizations,
as well as the training of tourism industry human resources to develop
their skills in tourism policy-making, planning, and management. It is
critical to stimulate both governmental and private sector investments
in tourism infrastructure and services. The fundamental goal of
Bangladeshs tourism strategy should be the expansion of
innovation and entrepreneurship. Establishing a Tourist Safety
Forceas part of the countrys law enforcement authorities and
implementing zoning restrictions in environmentally sensitive areas
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are key steps that can improve the sustainability and security of
Bangladeshi tourism. Smart tourist policies are critical, but so are
the skills and resources required to implement them. To compete with
local and international competition, Bangladeshs tourism sector
needs drastically strengthen its marketing and branding (Hassan
and Kokkranikal, 2018).
Poor maintenance of the destinations environment and resources;
inadequate tourist facilities, activities, and infrastructures; security and
safety concerns; a lack of a dedicated cell or body to guarantee the
quality of tourism products and services; a lack of coordination and
partnership among tourism stakeholders; an ineffective marketing
strategy; and an insufcient budget are all factors that slow down the
development of tourism in Bangladesh as a whole (Muneem et al.,
2020;Manigandan et al., 2022). Working cooperatively with
15 ministries, this strategy includes 11 sectors to cover. They also
classied the nations tourism into seven regions, each corresponding
to a different local government division. After thorough research and a
comparison of Bangladeshi and Bhutanese tourist policies, it was
concluded that Bangladesh should adopt the Low Volume, High
Valueapproach used by The Kingdom of Bhutan (Karim, 2014).
H3Good governance accelerates tourism development
3 Data and methodology of the study
3.1 Theoretical development and model
specication
Existing literature dealing with the determinants of tourism
development, the present study intends to explore the effects of c
environmental sustainability, nancial inclusion, and good
governance on tourism development in Bangladesh. Based on the
literature, the generalized relationship between ES, FI, GG, and TD,
along with the control variables, is as follows:
TD
ES, FI, GG, FDI, TO (1)
With the mediating effects of clean energy, i.e (ES*FI, GG*ES), the
above equation has been enlarged and represented as follows:
TD
ES, FI, GG, FDI, TO, ES*FI
()
,ES*GG
() (2)
TD denotes tourism development, CE for clean energy, and ES
explains environmental sustainability, FDI for foreign direct
investment, GE for governmental effectiveness, and ED for
education. Moreover, the mediating role of clean energy through
ES and FDI on TD has been addressed with the inclusion of
interactive terms. The above Eqs. 1,2can reproduce in the
following manner after log operation.
TDtα0+β1CEt+β2ESt+β3FDIt+β4GEt+β5EDt(3)
TDtα0+γ1CEt+γ2ESt+γ3FDIt+γ4ES*CE
()
+γ5FDI*CE
()
+γ6GEt+γ7EDt
(4)
Where α0is constant, the coefcient of β1............β5explain the
relations of CE, ES, FDI, GE, and ED on tourism development.
Furthermore, the interactive effects can be found with the
coefcient of γ4and γ5.
3.2 Financial inclusion
According to existing literature, the measurement of nancial
inclusion in empirical assessment has revealed two lines of
consideration. A group of researchers employed single proxies, and
another considered the nancial inclusion index with multiple proxies
(Qamruzzaman and Wei, 2019a;2019b;Chuc et al., 2021;Eggoh and
BangakÃ, 2021). By following Sarma (2008), the study measured
nancial inclusion by constructing an index with the three aspects
of nancial inclusion, such as accessibility, availability, and nancial
service usage (see Table 1 for details proxies).
The study implemented Principal Component Analysis (PCA),
which is widely utilized by, e.g., Jia et al., (2021);Qamruzzaman et al.,
(2021). The application of PCA is an effective and simple tool in
reducing dimensions but retaining the properties of the original data
set. The following Eq. 5has been implemented for index development.
FII WiFIit (5)
Where FII denotes the nancial inclusion index, Wi for principal
component weight, FIit for nancial inclusion value at t period. The
results of PCA for variables selection with eigenvalue are displayed in
Table 2, and factors for index construction report in Table 3, along
with the coefcient score matrix.
3.3 Estimation strategy
3.3.1 Unit root test
It is essential to check the series utilized in the econometric model
for stationarity if one wishes to guarantee reliable conclusions and
avoid the risk of erroneous regression. Before examining the long-term
dynamics, it is necessary to determine the correct integration
sequence. To verify the presence of unit roots throughout the series
that goes into the construction of our model, we resorted to two
distinct methods. The research units properties in the time series
assessment have played a pivotal role in selecting the appropriate
econometrical techniques for deriving the coefcients of the
explanatory variables (Meng et al., 2021). Following the existing
literate, the study has performed several stationary tests, which are
commonly known as the ADF test (Dickey and Fuller, 1979), the P=P
test (Phillips and Perron, 1988), the DF-GLS test (Elliott et al., 1996),
the KPSS test (Kwiatwski et al., 1992).
3.4 Bayer-combined cointegration test
As a means of testing the null hypothesis of no cointegration
relationship, we use the joint test statistics established by Bayer and
Hanck (2013). The Engle and Granger test, the Johansen test, the Peter
Boswijk test, and the Banajee test are all rolled into one new combined
cointegration test. One of the numerous benets of this strategy is that
it may provide model-specic cointegration ndings. The Bayer-
Hanck test evaluated the level of signicance associated with each
cointegration equation using Fishers formulas in the way described
below.
EG JOH −2LN PEG
()
+LN PJOH
()[]
EG JOH BO BD −2LN PEG
()
ln PJPH
()
+ln PBO
()
+ln PBDM
()[]
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PEG, PJOH, PBO, and PBDM represent the probability of
different model cointegration tests in Eqs. 6, 7. If the approximate
Fisher statistic exceeds the criteria established by Bayer and Hanck
(2013), we may conclude that cointegration exists. In addition to the
Bayer and Hanck combined cointegration tests, the Johansen
cointegration test is applied as a robustness check in a multivariate
situation. The Johansen test determines the number of cointegrating
vectors between variables. Cointegration cannot occur without each
cointegrating vector. The Johansen et al. (1990) techniques consider
calculating all feasible cointegrating vectors between the variables.
3.5 Autoregressive disoriented lagged (ARDL)
and augmentedautoregressive disoriented
lagged
To validate cointegration, the ARDL bound test was put to use
in this investigation. This method uses either the Wald test or the
joint F-statistic to determine whether the variables are
cointegrated. Comparing the probability of cointegration with
the likelihood that the model does not integrate yields some
interesting insights. Only if the F-statistic is larger than the
required upper limit would it be possible to reject the null
hypothesis that there was no integration. Following M. Hashem
Pesaran et al., (2001), the generalized ADRL model for the study
was considered for detecting both long-run and short-run
coefcients by performing the following equation.
ΔlnTDtα0+
n
i1
μ1ΔlnTDti+
n
i0
μ2ΔlnCEti+
n
i0
μ3ΔlnESti
+
n
i0
μ4Δln FDIt+
n
i0
μ5ΔlnGEti+
n
i0
μ6ΔlnEDti
+γ1lnTDti+γ2lnCEt1+γ3lnESt1+γ4lnFDIt1
+γ5lnGEt1+γ5lnEDt1+ω1t(6)
For interactive terms:
ΔlnTDtα0+
n
i1
μ1ΔlnTDti+
n
i0
μ2ΔlnCEti+
n
i0
μ3ΔlnESti
+
n
i0
μ4Δln FDIt+
n
i0
μ5Δln ES*CE
()
ti
+
n
i0
μ6Δln FDI*CE
()
t+
n
i0
μ7ΔlnGEti+
n
i0
μ8ΔlnEDti
+γ1lnTDti+γ2lnCEt1+γ3lnESt1+γ4lnFDIt1
+γ5ln ES*CE
()
t1+γ6ln (FDI*CE)+γ7lnGEt1
+γ8lnEDt1+ω1t(7)
3.6 Asymmetric autoregressive disoriented
lagged estimation
In the recent literature, the application of asymmetric
framework has been extensively used in effective policy
TABLE 1 Variables denition and data sources.
Variables Notation Denition Data sources
Remittances Rim Personal remittances received to GDP (%) WDI World Bank, (2022)
Economic policy uncertainty EPU Economic Policy uncertainty index Baker, Bloom, and Davis (2016)
Financial inclusion index (FII) Authorsconstruction with the following fours proxies
ATMs per 100,000 adults World Development Indicator World Bank, (2022)
Number of commercial bank branches per 100,000 adults
Number of depositors from commercial banks per 1,000 adults
Number of borrowers from commercial banks per 1,000 adults
Trade openness TO The sum of imports and export as a % of GDP
Exchange rate EX Real exchange rate
Note: WDI, for World Development Indicators.
TABLE 2 Results of PCA for nancial inclusion index.
Principal components Eigenvalue Cumulative (%) Eigenvalue Cumulative (%)
India China
Components1 1.9452 .5942 1.7812 .7515
Components2 .9845 .7925 .8641 .8451
Components3 .8452 .8944 .5125 .9531
Components4 .7954 1.000 .4481 1.0000
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Islam et al. 10.3389/fenvs.2022.1056268
formulation (Lingyan et al., 2021;Xu et al., 2021;Li and
Qamruzzaman, 2022b;Xia et al., 2022). Asymmetric
framework assists in exploring the elasticity of explanatory
variables through the decomposition that is positive and
negative shocks, which reveals fresh evidence s over the
conventional relations. The study considered a non-linear
framework following Shin et al., (2014a).Thefollowing
generalized model is to be implemented.Where
β+,β,γ+,γ,π+,and πfor the long-run pavements. The
coefcient of β+and βspecies the effect of positive and
negative shocks in CE, ES and γ+and γdenotes the asymmetric
effects of FDI on RE. Furthermore, the coefcients of δimeasures
the effects of control variables in the equation.
The asymmetric shock of nancial inclusion, i.e., FI
+
;FI
,
environmental sustainability, i.e., ES
+
;ES
,
and Good Governance
(GG
+
; GG) can be derived in the following manner.
POS FI
()
1,t
t
k1
lnFI+
k
T
K1
MAX ΔlnFIk,0
()
NEG FI
()
t
t
k1
lnFI
k
T
K1
MIN ΔlnFIk,0
()
:
POS ES
()
1,t
t
k1
lnES+
k
T
K1
MAX ΔlnESk,0
()
NEG ES
()
t
t
k1
lnES
k
T
K1
MIN ΔlnESk,0
()
;
POS GG
()
1,t
t
k1
lnGG+
k
T
K1
MAX ΔlnGGk,0
()
NEG GG
()
t
t
k1
lnGG
k
T
K1
MIN ΔlnGGk,0
()
Now, Eq. 8is transformed into asymmetric long-run and short-
run coefcient assessment as follows:
ΔTDtzUt1+β+FI+
1,t1+βFI
1,t1

+γ+ES+
1,t1+γES
1,t1

+π+GG+
1,t1+πGG
1,t1

+δX1,t1
*+
m1
j1
λjΔTDtj0
+
n1
j1
π+ΔFI+
1,t1+πΔFI
1,t1

+
m1
j0
π+ΔES+
1,t1+πΔED
1,t1

+
m1
j0
β+ΔGG+
1,t1+βΔGG
1,t1

+
m1
j0
µΔX1,t1
*+εt(8)
A standard Wald test will be performed using the null symmetry
hypothesis to detectasymmetry over the long and short term. Only very
small sample sizes can establish unequal long-term and short-term
associations. Furthermore, if the test statistics are larger when compared
to the critical value, then the asymmetric long-run cointegration that is
to be tested by following F-bound testing, Joint Primality testing, and
tBDM testing will be validated in the empirical model.
3.7 Fourier Toda and Yamamoto causality test
According to the existing literature, the conventional granger
causality test offered by. Has misconception and failed to address
the issue of structural changes in the data, thus producing spurious
estimation in some instances. To overcome the limitation of
conventional casualty tests, The Granger (1969) causality test
was used by the research team to investigate the potential for
causation between the various macroeconomic variables. However,
the Granger test and many other causality tests in the literature,
including those by Toda and Yamamoto, overlook structural
discontinuities in the series. This is the case even though the
Granger test was developed (TY; (Toda and Yamamoto, 1995).
Enders and Jones (2016) illustrated that problems with
misspecication might arise in the VAR model if there is an
inability to account for structural fractures. Consequently, there
is an increased likelihood that the correct null hypothesis may be
incorrectly rejected. Nazlioglu et al., (2011) created the Fourier TY
causality tests to correct this deciency with the expansion of the
trigonometricterm.TheVARmodelmaybereplicatedinthe
following ways:
ytαt
()
+β1yt1+...+βp+dytp+d
()
+εt(9)
ytαt
()
+β1yt1+...+βp+dytp+d
()
+ϑ1sin 2kπt
T+ϑ2cos 2kπt
T+εt
(10)
The null hypothesis for FourierTY test is no causality between
variables (H0:β1β2................βP0)
4 Results and interpretation
4.1 Unit root test
Econometric empirical nexus assessment with time series data
demands detecting variablesstatic properties in selecting the
appropriate econometrical techniques for efcient and
consistent estimation. The study has implemented several unit
root tests, such as the ADF test, which is familiarized by Dickey
and Fuller (1979), the GF-DLS test, which is offered by Elliottetal.
(1996), and the PP test, which is introduced by -Phillips and
Perron (1988), in documenting the stationary attributes of the
research data set with the null hypothesis of not stationary and for
KPSS-Kwiatkowski et al. (1992) with the null of stationary.
Table 4 exhibited the results of the stationary test and
established that all the variables are stationary after the rst
difference, and neither has exposed stationary after the second
difference.
The study has extended the unit root test with the implementation
of the second-generation unit root test announced by Ng and Perron
(2001), and the results are displayed in Table 5. In terms of test
statistics, that is MZa, MZt, MSB, and MPT derived from estimation,
and it is apparent that all the test statistics are statistically signicant at
a 5% signicance level, indicating the variables are stationary after the
rst difference.
The following study implemented the novel combined
cointegration test, introduced by Bayer and Hanck (2013), with the
integration of the existing conventional cointegration test in
authenticating the long-run association between tourism
development, nancial inclusion, good governance, and
environmental quality in Bangladesh. Table 6 exhibits the results of
the cointegration test. Refers to the test statistics, it is manifested that
the null hypothesis of no-cointegration is rejected in all model
assessments; alternatively, the study establishes a long-run
association between tourism and explanatory variables.
Next, the study assesses the long-run cointegration by
implementing the linear framework proposed by M Hashem
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Pesaran and Smith (1995) and further developed by M. Hashem
Pesaran et al. (2001)and the non-linear framework offered by Shin
et al. (2014a). The results of the long-run cointegration test under
the symmetric and asymmetric framework are available in Table 7.
The test statistics derived from the symmetric (asymmetric)
assessment that is F
overall
=11.203(12.062),t
DV=-5.69(-4.857),
and
F
IDV
= 8.688 (8.761) revealed statistically signicant at 1% level,
indicating the rejection of the null hypothesis of no-cointegration.
Study ndings suggest long-run association under the symmetric
and asymmetric framework environment. In the following section,
the study evaluates the explanatory variables magntitutes on
tourism development under a symmetric and asymmetric
framework.
4.1.1 For long-run symmetric assessment
The results of long-run coefcients of symmetric assessment
displayed in Table 8. The study documented a negative and
statistically signicant linkage between the nexus between
environmental quality, measured by carbon emission, and
tourism development (a coefcient of .1347). Study ndings
postulated that environmental degradation has adverse effects
on tourism development; precisely, a 10% growth in carbon
emission will result in a decline in tourism progress by 1.347%.
The existing literature supports the ndings of an adverse
association between environmental quality and tourism
development (Green and Hunter, 1992). For good governance (a
coefcient of .01625). The study unveiled a positive and statistically
signicant linkage to tourism in Bangladesh. More precisely, a 10%
development in governmental effectiveness will result in tourism
development by .1625%, indicating that governmental effectiveness
is a thriving factor in tourism development. Our ndings align with
existing literature (Detotto et al., 2021;Hassan and Meyer, 2022;
Yang et al., 2022). The positive and statistically signicant tie
between nancial inclusion and tourism development explained
that nancial inclusion accelerated the present status of tourism
TABLE 3 Results of Components score coefcient matrix.
Financial inclusion index proxies
1
Factor score
coefcient
India China
FI
1
.6845 .5548
FI
2
.4533 .4591
FI
3
.5214 .4655
FI
4
.4112 .3512
TABLE 4 Results of unit root test.
At level After rst difference
ADF GF-DLS PP KPSS ADF GF-DLS PP KPSS
For Brazil
TOR .2573 1.715 1.8856 .7984*** 6.7477*** 5.4954*** 7.9486*** .0207
FI .9351 .5654 1.4497 .7395*** 8.7373*** 7.2702*** 5.6356*** .0188
IQ .4616 1.9925 1.6997 .8669*** 8.0435*** 5.5837*** 8.3038*** .0213
EQ 1.3845 .5183 1.7074 .802*** 7.7193*** 7.8388*** 6.275*** .0195
TO .4214 2.2674 2.4592 .7112*** 8.617*** 9.472*** 5.9688*** .0194
FDI 1.7206 1.6411 1.414 .7085*** 7.2408*** 8.4006*** 5.3874*** .0203
TABLE 5 Results of Ng-Perron unit root test.
At level At rst difference
MZa MZt MSB MPT MZa MZt MSB MPT
TOR 1.792 1.1962 .3057 7.8258 24.6637 4.1101 .1567 5.1232
FI 2.6277 1.0496 .3479 7.888 21.8082 4.5576 .1442 3.3834
IQ 1.9655 1.733 .2914 8.6769 18.4287 4.7 .1292 4.6921
EQ 2.0994 .8912 .3569 8.6497 19.6062 5.5902 .1534 3.7751
TO 2.0167 1.7 .3193 7.6499 19.8258 4.5359 .1591 3.5683
FDI 1.7075 .7233 .3155 8.7107 17.1099 4.925 .1456 4.6622
Asymptotic critical values: Ng and Perron (2001),table 1
1% 23.8 3.42 .143 4.03
5% 17.3 2.91 .168 5.48
10% 14.2 2.62 .185 6.67
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development. According to nancial inclusion elasticity, it is
assumed that a 10% growth in nancial inclusion, that is, access
to nancial services, will boost tourism development by 1.0173%. A
study suggests that nancial services.
4.1.2 For long-run asymmetric assessment
Table 9 exhibited the results of asymmetric coefcients for the
long-run and short-run assessment. The study has implemented
the standard Wald test in assessing the asymmetric association
between independent variables, including environmental
sustainably, good governance, nancial inclusion, and tourism
development, with a null hypothesis of symmetric association.
Concerning the test statistics, (WES
LR = 6.631; WGG
LR = 7.224; and
WFI
LR = 12.145), all the test statistics are statistically signicant at a
1% level, conrming the asymmetric association between target
variables and tourism development.
The asymmetric shocks that are positive and negative
innovation in environmental quality, more precisely increases
(decreases) carbon emission in the ecosystem, has revealed a
negative (negative) linkage with tourism development,
indicating that environmental degradation and adversity
deteriorate the speed of tourism development. In particular, a
10% increase (decrease) in carbon emission results in degradation
(development) in tourism development by .5491% (1.3639%),
suggesting that environmental protection for ecologically
balanced offer a conducive ambiance for tourism development.
According to the asymmetric coefcients of good governance,
measured by governmental effectiveness, positive (negative)
variations in good governance established a positive (positive)
connection with tourism development, implying that attracting
international tourists for tourism development is essential to offer
stability to the economy. Particularly, a 10% development
(degradation) of governmental effectiveness results in tourism
development (degradation) by 1.2687% (1.3431%); in terms of the
asymmetric nexus between nancial inclusion and tourism
development, the study disclosed a positive, statistically
signicant association between them. Specically, 10% positive
(negative) innovations in nancial inclusion augmented
(reduced) the movement of tourism development by .3077%
(.6369%). Study ndings suggest that expansion of nancial
services in the nancial system opens an avenue to get nancial
services and benets with ease; the access to nancial services
prompts nancial image in the mind of international tourists,
eventually leading to tourism development.
The study has implemented the standard Wald test in assessing
an asymmetric association between independent variables,
including environmental sustainably, good governance, nancial
inclusion, and tourism development, with a null hypothesis of
symmetric association. Concerning the test statistics, it is apparent
that all the test statistics are statistically signicant at a 1% level,
indicating the conrmation of asymmetric association between
target variables and tourism development.
4.1.3 Short-run symmetric assessment
Refers to the short-run elasticities of the independent variables,
the study documented adverse effects running from carbon emission
to tourism development (a coefcient of-.1039), positive inuences
from good governance (a coefcient of .0162), and nancial
inclusion (a coefcient of .1017) and all the coefcient are
statistically signicant at a 1% level. Study ndings suggest that
tourism development in Bangladesh will experience development
due to a 1% change in carbon emission by .1039%, good governance
accelerates by .0162%, and nancial inclusion prompts by .1017%,
respectively. The error correction term revealed negative statistically
signicant (a coefcient of .3841), explaining the correction of
disequilibrium due to shocks in the short-run at a speed of 38.41%
per year; alternatively, the long-run equilibrium can be reached in
2.603 years.
TABLE 6 Results of combined cointegration test.
EG-JOH EG-JOH-BO-BDM
Model Statistics CV Statistics CV
TOR FI 14.744 11.229 36.861 21.931
TOR FI, GG 10.928 10.895 24.468 21.106
TOR FI, GG, EQ 11.259 10.637 24.142 20.486
TOR FI, GG, EQ, FDI 10.774 10.576 21.325 20.143
TOR FI, GG, EQ, FDI, TO 10.774 10.419 20.935 19.888
TABLE 7 Results of long-run cointegration-linear and non-linear framework.
Approach Model F
overall
t
DV
F
IDV
ARDL TOR FI, GG, EQ, FDI , TO 11.203*** -5.69*** 8.688***
Non-Linear ARDL TOR FI+,FI
,GG
+,GG
,EQ
+,EQ
, FDI , TO 12.062*** -4.857*** 8.76***
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4.1.4 Short-run asymmetric assessment
A short-runasymmetric association between independent variables,
including environmental sustainably, good governance, nancial
inclusion, and tourism development with a null hypothesis of
symmetric association, has been investigated using the standard
Wald test. For the test statistics, (WES
SR = 11.531; WGG
SR = 10.656; and
WFI
SR = 8.9413), it is apparent that all the test statistics are statistically
signicant at a 1% level, indicating the validation of an asymmetric
association between target variables and tourism development. The
error correction term was negative and statistically signicant (a
coefcient of .1608), implying the long-run disequilibrium to be
corrected at a speed of 16.08% per year.
Inferring the elasticity of carbon emission on tourism development,
the study established asymmetric shocks of environmental sustainability
negatively tied with tourism development, and the coefcients are
statistically signicant.Additionally,theasymmetriccoefcients of
governmental effectiveness unveiled a positive and statistically
signicant association with tourism development in Bangladesh. The
asymmetric variation of nancial inclusion established a similar vine of
relations like governmental effectiveness.
4.2 The mediating role of nancial inclusion
and good governance through environmental
sustainability
Next, we moved the empirical investigation with the inclusion of
interactive terms for investigating the mediating effects of nancial
inclusion and good governance. The result of the symmetric,
asymmetric assessment with interactive terms is displayed, in
Table 10. For symmetric assessment, the coefcient of interactive term
between environmental sustainability and good governance (a coefcient
of .0917) and environmental sustainability and nancial inclusion (a
coefcient of .0322) have revealed positive and statistically signicant,
suggesting the mediating role of good governance and nancial inclusion.
In terms of asymmetric assessment, the study exposed the asymmetric
innovation in interactive terms, that is, the positive and negative variations
revealed positively associated with tourism development, especially in the
long run.
4.3 Causality test
To document the long-run causal association, the study implemented
the non-granger causality test following. The result of the causality test is
displayed in Table 11. The study has implemented the non-granger
causality framework offered by Toda and Yamamoto (1995) for
directional causal assessment, and the results are displayed in
Table 11. According to the test statistic from causal assessment, the
study documented two vain of association that is bidirectional and
unidirectional. For bidirectional causal effects, the study established
feedback hypothesis holds in explaining the causal relations between
tourism development and good governance (TOR←→GG); tourism
development and environmental sustainably (TOR←→ES); nancial
inclusion and tourism development (FI←→TOR). Furthermore, the
study unveils unidirectional causality running from foreign direct
investment to tourism development (FDITOR) and tourismled
nancial development (TORFD).
4.4 Robustness test
The study implemented Dynamic OLS, Fully modied OLS,
and CCR regression to evaluate the empirical model construction
TABLE 8 Results of long-run coefcients: symmetric and asymmetric assessment.
Symmetric assessment Asymmetric assessment
Coefcient t-stat Std. error Coefcient t-stat Std. error
EQ .1347 .004255 -31.6282
EQ
+
.05491 .010802 5.08313
EQ
-
.13639 .010038 13.5878
GG .0162 .002597 6.25864459
GG
+
.12687 .005463 23.22352
GG- .134313 .004621 29.06574
FI .1017 .003354 29.84713775
FI
+
.03077 .00477 6.4508
FI
.06369 .01191 5.3459
FDI .0672 .0025 25.9764 .07555 .00308 25.1183
FD .0879 .00918 9.6296 .051848 .006639 7.80961
WES
LR 6.631
WGG
LR 7.224
WFI
LR 12.145
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consistency and efciency in estimation. Table 12 exhibited the
results of the robustness assessment. According to the sign of the
study explanatory variables, the estimation conrmed the same
vine of association between explanatory variables: environmental
sustainability, nancial inclusion, good governance, and tourism
development. More specically, good governance and nancial
inclusion are positively associated, and carbon emission reveals an
adverse tie with tourism development, which aligns with
symmetric and asymmetric estimation assessment.
5 Discussion
The study documented a negative and statistically signicant
linkage between environmental sustainably and tourism
development, implying that carbon emission adversely causes
tourism development. In terms of symmetric (asymmetric)
investigation, the study suggested that a 1% reduction in carbon
emission positively affects tourism development by .1039%
(.0335%). The study advocated that a controlled environment
through carbon emission reduction can contribute to tourism.
Our ndings align with the existing literature (Ahmed and
Laijun, 2014;Tong et al., 2022). Geographical aspects some
physical factors, for instance, the locationsgeographyand
climate, the amenities offered there, and the marketing and
advertising campaigns run by the tourism industry, affect the
decisions that travelers make. However, it is vital to maintain
the natural environment tourists visit, including natural habitats
and local wildlife that is sometimesuniqueworldwide.Asaresult,a
portion of tourist earnings is used to conserve the visited basic
biological ecosystems. Pollution can reduce the appeal of natural
elements such as stunning landscapes, natural hydrologic systems,
clean water, pure air, and animal variety (Gössling et al., 2013). The
competitiveness of most types of tourist destinations depends on
maintaining a high degree of overall environmental quality,
making it a top priority for destination management. There are
many countries around the world where tourism generates
signicant revenue. The most visited tourist destinations of the
world have one feature in common that sets them apart from other
destinations: cleanliness. (Alam et al., 2022b).
TABLE 9 Results of short-run coefcients: symmetric and asymmetric assessment.
Symmetric assessment Asymmetric assessment
Coefcient Std.error T-stat Coefcient Std.error T-stat
EQ .1039 .010994 9.4571
ES
+
.0501 .0052
ES
-
.0335 .0079
GG .1072 .0053 20.1615
GG
+
.0169 .0046 3.6739
GG- .0454 .0078 5.8205
FI .0817 .0033 24.6158
FI
+
.0467 .0076 6.1447
Fi
-
.0423 .0039 10.8461
FDI .0220 .0089 2.4709 .0107 .0065 1.6461
FD .0710 .0053 13.2711 .0066 .0104 .6346
ECT (-1) .3841 .0388 9.899 .1608 .002632 61.0946
Constant 6.280786 .5007 12.5440 1.24555 1.0423 1.1951
WES
SR 11.531
WGG
SR 10.656
WFI
SR 8.9413
x2
Auto .869 .618
x2
Het .655 .836
x2
Nor .692 .789
x2
RESET .513 .72
CUSUM Stable Stable
CUSUM Of Square Stable Stable
Frontiers in Environmental Science frontiersin.org12
Islam et al. 10.3389/fenvs.2022.1056268
TABLE 10 Results of Mediation assessment.
Long-run cointegration
F
overall
t
DV
F
IDV
ARDL 14.222*** 5.712*** 6.644***
NARDL 6.394*** 5.236*** 7.501***
Panel B: Long-run coefcients
Coefcient t-stat Std.error Coefcient t-stat Std.error
LONG RUN
EQ .022702 .002999 7.569857 EQ
+
.028658 .010834 2.645191
GG .10091 .007838 12.8749 EQ
-
.04785 .011707 4.087281
FI .05114 .009504 5.380882 GG
+
.12962 .003482 37.2246
FDI .106394 .003534 30.10591 GG- .09212 .011945 7.71192
FD .094855 .006539 14.50599 FI
+
.064228 .002442 26.30147
Fi
-
.036994 .004128 8.961725
FI*ES .056853 .007251 7.840712
GG*ES .071946 .011382 6.321033
FI*ES .075048 .010955 6.850571
FI*ES .051158 .005525 9.259367
GG*ES .09178 .005734 16.00635 FDI .027847 .011136 2.500629
FI*ES .032221 .007164 4.497613 FD .069324 .007033 9.85696
C.09542 .007173 -13.3032 C .0658 .002232 29.4821
WES
LR 3.851
WGG
LR 6.525
WFI
LR 5.489
WES*GG
LR 12.882
WES8FI
LR 13.656
Panel C: Short-run coefcient
EQ .0289 .0097 2.9793 EQ
+
.0185 .0106 1.7452
GG .0338 .0051 6.6274 EQ
-
.0587 .0028 20.9642
FI .0249 .0024 10.375 GG
+
.015 .0094 1.5957
FDI .0919 .0103 8.9223 GG- .0337 .0083 4.0602
FD .0108 .0025 4.32 FI
+
.0158 .0096 1.6458
Fi
-
.0455 .0038 11.9736
FI*ES
+
.0039 .0056 .6964
GG*ES
-
.0057 .0032 1.7812
FI*ES
+
.0176 .0089 1.9775
GG*ES .0103 .0042 2.4523 FI*ES
-
.026 .0092 2.826
FI*ES .0956 .0115 8.313 FDI .01 .0059 1.6949
FD .24805 .002695 92.0419
(Continued on following page)
Frontiers in Environmental Science frontiersin.org13
Islam et al. 10.3389/fenvs.2022.1056268
Our study ndings established a positive and statistically
signicant association between nancial inclusion and tourism
development, validated under both symmetric and asymmetric
assessment. Study ndings advocate that easy access to nancial
services offers efciency in a nancial settlement, especially in the
case of currency conversion and electronic money