Risk factors affecting tourism revenues in Turkey

This study aims to provide empirical insights into how tourism income(LNTUG) and BIST (Borsa İstanbul) Tourism price index(TUE) are affected by risk indicators such as CDS(credit default swap) and real exchange rate index(REFE). Tourism income, BIST(Borsa İstanbul) tourism index, CDS and real exchange rate index have been examined. The monthly data between January 1, 2012 and December 31, 2020 are used. Vector autoregression (VAR), Vector error correction(VECM), Granger causality and impulse response test are employed in the analysis. Granger causality test results have revealed that there are no causality between CDS and TUE, REFE and TUE, CDS and LNTUG, REFE and LNTUG, respectively. VAR and VECM results have revealed that there is not a significant relationship between CDS(-2) and Tourism income, BIST(Borsa İstanbul) Tourism price index, respectively. Besides, that there is not a significant relationship between REFE(-2) and Tourism income, BIST(Borsa İstanbul) Tourism price index, respectively. VECM results have shown a significant negative relationship between tourism income and CDS. CDS, which covers Turkey's economic and political risk, will decrease due to lower current account deficit when tourism income increases. It is recommended to make a master plan to diversify tourism activities throughout the year.