The Impact of digital financial inclusion on the urban-rural income gap in China

Abstract

China is the second largest economic power in the world. The dual structure of urban and rural areas restricts the fair and reasonable allocation of financial resources, resulting in the problem of excessive income gap and affecting China's social equity. Due to the widespread application of the Internet, digital financial inclusion has risen rapidly and has become an important factor affecting China economic development. Digital financial inclusion relies on technological innovation of inclusive financial products and services, and has advantages in reducing costs, expanding the scope of financial services, and effectively controlling risks. On the basis of theory and status quo, this paper selects data from 30 provinces in China, uses Theil index to measure the urban-rural income gap, and uses digital financial inclusion data from the Digital Finance Research Center of Peking University as explanatory variables. After the Housman test, random or fixed effect models are used to analyze the impact of digital financial inclusion on the urban-rural income gap, and to explore the impact of different dimensions and economic zones. The research results show that the development of digital financial inclusion in China can significantly reduce the income gap between urban and rural areas; the development effects of development digital financial inclusion in each dimensions and economic zones are different. Finally, this paper puts forward relevant suggestions for the government, regulators and financial institutions. The government and regulatory agencies need to strengthen supervision and pay attention to the rational allocation of resources, financial institutions should strengthen publicity and product innovation of digital financial inclusion, and traditional banking industry should increase participation.