Relational finance and community-based lending: resilience and limitations in Galle’s marine tourism sector

Abstract

Marine tourism in Galle, Sri Lanka, is rapidly emerging as a vital driver of local economic development and sustainable blue economy ambitions. However, marine tourism operators face significant challenges in accessing adequate and reliable funding, often relying on fragmented and unsustainable traditional financing channels. This study critically examines existing financial practices among tourism operators in Galle to identify the shortcomings that require policy interventions and strategic reforms. Employing a qualitative, interpretive approach, 30 key stakeholders directly engaged in Galle’s marine tourism sector were interviewed to uncover their experiences and perceptions. A purposive sampling strategy was adopted to select participants who could provide rich, firsthand insights, ensuring a diverse range of perspectives. The analysis revealed four central themes that structure the findings. Operators face major barriers in accessing institutional credit due to collateral requirements and high interests; they rely heavily on community-based and informal lending practices that provide short-term relief but limit their long-term investment; external and donor support is available but fragmented and project-dependent; and financial management practices are largely informal, constraining credibility with formal lenders and hindering sustainable growth. The research findings collectively indicate a financing situation that is primarily characterized by informal sources of financing and irregular external support, thus limiting operators’ possibilities to extend their operations, implement sustainable practices, and develop resilience. The paper points out the demand for customized credit funds for marine tourism operators, better financial literacy and accounting assistance, and more synchronized governmental and private sector activities to make the financial ecosystem more robust and in line with the blue economy objectives.