Financial risk formation in tourism financialization: a Geographical Political Economy perspective

Drawing on the framework of Geographical Political Economy, this study seeks to address a central question: how are financial risks in tourism generated. This study focuses on two representative projects, one financed by a tourism enterprise and the other by local government investment. The results show three main findings. (1) Tourism financial risks originate from the process of tourism financialization. Capital misallocation and the asset-oriented transformation of tourism business models are the key mechanisms contributing to risk formation, which are shaped by the actors’ interactions within financing networks. (2) Regional variations in institutional and financial structures further differentiate these processes. Areas with strong institutional intervention exhibit fiscally-driven financialization, emphasizing policy-backed investment and industrial integration while facing fiscal risks such as hidden debt, and overdependence on local government-organized platforms. In contrast, regions with more dynamic private capital follow market-driven financialization, relying on land-value capitalization in tourism real estate and hospitality. (3) Tourism spatial stickiness indirectly constrains the spread of financial risk, such as within the county boundaries in the studied cases. Overall, the study demonstrates that financial risks in tourism may not arise from weak business operation or direct market turmoil, but are embedded in the process of tourism financialization.