Risk Spillovers in Returns for Chinese and International Tourists to Taiwan

Abstract

Fluctuations in the numbers of visitors directly affect the rates of return on tourism business activities. This article is the first to examine the spillover effects between the rate of change in the numbers of Chinese tourist arrivals and the rate of change in the numbers of international traveler arrivals. The study used daily data from January 1, 2014, to October 31, 2016, with 1,035 observations. The diagonal BEKK model was used to analyze the co-volatility spillover effects between the rate of change in the international travelers and the rate of change in the amount of Chinese tourists visiting Taiwan. The empirical findings suggest that Taiwan should abandon its development strategy of focusing only on a single market, namely, China. Moreover, with the reduction in Chinese tour groups visiting Taiwan, and increases in individual travelers, the Taiwan Government should change its previous travel policies of mainly attracting Chinese tour group travelers and actively promote in-depth tourism among international tourists.