Analysis on the Poverty Reduction and Income Increase Effect of Digital Financial Inclusion—Evidence from 1736 counties of China
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Abstract
The third technological revolution based on the Internet that humanity is experiencing has a vast and far-reaching impact on efficiency and fairness. Under the powerful catalysis of the Internet revolution, China has rapidly developed a digital economy and finance. This paper combines the data of 1736 counties in China from 2014 to 2017 and the Peking University Digital Financial Inclusive County Index, using the panel instrumental variable quantile regression method to empirically analyze the effect of digital financial inclusive finance on poverty reduction and income increase of Chinese county residents. The research results show that, on the whole, Digital Financial Inclusion (DFI) has significantly promoted the income growth of residents in poor and non-poor counties; the panel instrumental variable quantile regression results show that DFI has a more obvious income increase effect on low-income groups. The further sub-sample regression of impoverished counties and non-poverty counties and the division of the sample into three major regions: East, middle, and west, the regression results show that the effect of DFI on low-income groups is more obvious; DFI can strengthen the role of traditional financial development and promotion, employment increase and industrial structure upgrading in promoting poverty reduction and income increase, but this conclusion is not valid in poor counties. Therefore, China should vigorously develop DFI as a way for low-income groups to reduce poverty and increase income.
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