Heterogeneity Influence of Financial Digitalization and Inclusion on Employees’ Psychological States

Abstract

Digital inclusive finance (DIF) has the power to spawn a new system of Internet finance and realize financial inclusion. However, the role of DIF in improving the health status of individuals is largely unknown. This study aims to demonstrate whether and how the development of DIF impacts the mental health of Chinese employees. This paper performs an empirical study based on the city-level data of the digital inclusive financial index with the China family panel studies. Ordinary least squares (OLS), probit models and mediation techniques are employed with appropriate instruments to alleviate endogeneity concerns. The results show that DIF can help employees improve their mental health. The results were robust to a variety of checks. Moreover, increasing income is the main pathway in which DIF improves individual mental health. Finally, it also reveals the heterogeneous effects of DIF on individual mental health. That is, the use depth of DIF has a significant positive effect on mental health status, but not on other sub-indicators, such as coverage breadth and degree of digital service provision; on those vulnerable groups containing females and employees with low education, its decisive role is larger than their counterparts who are males and have high levels of education. These results highlight the vital role of DIF in improving the mental health status of individuals. Consequently, there is a need to strengthen the construction of financial infrastructure and achieve a deeper integration of the financial system with digital technologies.

Keywords

• mental health
• digital inclusive finance
• income