The aim of the study is to examine the impact of COVID-19 on the return of the tourism industry by integrating explanatory variables such as ISE index, exchange rate, and interest rate for Turkey over the period of 11 March 2020 to 31 December 2020. The findings obtained indicate that the optimal lag length of VAR model is 1. According to the Granger causality analysis findings, one-way causality is determined running from the COVID-19 confirmed cases and ISE 100 index to the tourism industry returns. At the same time, the tourism industry returns against a standard deviation shock as the number of confirmed cases first increases, then falls, and afterwards stabilizes. Variance decomposition analysis findings show that the change of tourism industry returns in the first week is determined by itself. They also demonstrate that from the second week to the tenth week, the biggest determinant of the change in the tourism industry returns are the ISE 100 index at an average rate of 4%, and the last one is COVID-19 cases.
TopIntroduction
Since the beginning of the 21st century, the “9/11 event” (2001), SARS (2003), Indonesian tsunami (2004), HINI (2009), EBOV (2014) and public emergencies such as the COVID-19 pandemic spreading rapidly all over the world have emerged or are emerging (Li et al., 2021).
With the first case emerging in Wuhan, China in December 2019, the new corona virus (COVID-19) has speeded rapidly to the European countries and the United States. Due to the rate of spread of this virus, the World Health Organization (WHO) declared the COVID-19 outbreak as a global pandemic on March 11, 2020 (Ali et al., 2020; Harjoto et al., 2021, Lee et al., 2021). While the total number of confirmed cases was 122,082 on March 11, 2020, the total number of confirmed cases was determined as 82,956,636 on December 31, 2020 (World Health Organization, 2022). The COVID-19 pandemic, which affected all countries, caused approximately 83.75 million total cases and 1.88 million deaths in the world on 12.31.2020. Due to the rapidly increasing COVID-19 pandemic in Turkey, the first case occurred on 03.11.2020 and the first death occurred on 03.17.2020. On the other hand, it caused a total of 2.21 million cases and 20,881 deaths in Turkey on 12.31.2020 (Our World in Data, 2022).
Thus, COVID-19, which has turned into a global epidemic, has affected people's lives in many areas and caused many deaths. In addition, the pandemic, which humanity has not experienced for a long time, causes us to change our daily living habits. The lifestyle that has changed with the pandemic also affects people's consumption choices. This situation causes many sectors to be negatively affected economically and also enables some sectors to grow and increase their value with the effect of needs (Kılınç & Çalış, 2021). On the other hand, this pandemic poses a serious threat to social stability and economic development globally and has a significant impact on global financial markets (Li et al., 2021).
After the declaration of the pandemic, on 12 March 2020, there was a 4.3% decrease in the Istanbul stock exchange (ISE) index in Turkey, 7% in the S&P 500 index and Dow Jones index in the USA, and 5.7% in FTSE 100 index in the UK (BBC News, 2022). In this context, COVID-19 has adversely affected national and global economies. Various sectors in many countries have faced an uncertain degree of loss and multiple complexity. Especially in the tourism sector, low demand, interruptions in the supply chain and transportation, and travel bans have affected this sector a lot (Yiwei et al., 2021). At the same time, on 12 March 2020, there was a 15% decrease in the ISE Tourism indexes in Turkey, as well as a 15% decrease in the IT index, 12% in the Transportation index, 8.4% in the Bank index and 6% in the Communication index (Göçmen Yağcılar, 2021). Therefore, these data indicate that the tourism sector is one of the most affected sectors in Turkey, as in many other countries.