Digital financial inclusion and upgrading of consumption structure: Evidence from rural China

Abstract

Based on the perspective of spatial economy, this paper focuses on the primary effects and spatial characteristics of Digital Financial Inclusion (DFI) on the upgrading of rural consumption structure (URCS) in China, conducting a literature review and theoretical analysis. It then uses statistical data collected over the years and the Digital Financial Inclusion Index (DFII) of Peking University to prepare panel data for 31 provinces in China (aside from Hong Kong, Macao, and Taiwan) from 2011 to 2020 for empirical testing. The results are as follows: DFI can considerably boost URCS, and there is a strong spatial neighbor impact, that is, it is affected by random shocks in surrounding provinces via its spatial effect; DFI has nonlinear characteristics in the process of fostering URCS, with the threshold variables of income level and family sizes; the impact of DFI on URCS is spatially heterogeneous, and the promotion of the eastern region is better than other zones. These results can inform policymakers about rural development and provide valuable references to push forward rural vitalization.

Keywords

• Digital financial inclusion
• Upgrading of rural consumption structure
• Spatial effect
• Threshold effect
• Spatial heterogeneity