The Macroeconomic Determinants of International Casino Travel: Evidence from South Korea’s Top Four Inbound Markets

摘要

This study investigates the macroeconomic determinants behind the number of foreign visitors to Korean casinos arriving from major source countries, namely Japan, Mainland China, Hong Kong SAR and Taiwan. Using monthly data from 2006 to 2016, we utilized a Structural Vector Autoregression (SVAR) model to investigate the dynamic effects of macroeconomic factors on the number of casino visitors. Estimation results supported the conclusion that visitors from Japan and Mainland China—who account for approximately three quarters of the total number of foreign casino visitors—were affected by macroeconomic or financial indicators such as changes in oil prices, exports and exchange rates (Japan), exports and short-term interest rates (Mainland China). In contrast, visitors from Hong Kong SAR did not seem to be influenced by any of these factors. We also found that the MERS (Middle East Respiratory Syndrome) outbreak in Korea in 2015 had a significant adverse effect on casino visitors from all regions. Implications and suggestions for future studies are provided along with the results of this study.