The Protective Effect of Digital Financial Inclusion on Agricultural Supply Chain during the COVID-19 Pandemic: Evidence from China

Abstract

Financial inclusion plays a positive role in protecting agriculture during or after disaster. This paper focuses on the protective effect of digital financial inclusion on the agricultural supply chain and analyzes three mechanisms of the protective effect: financial widening, financial deepening, and financial services digitization. Based on the Gravity Equation, we conduct an empirical study using agricultural logistics and digital financial inclusion data from China. The regression results indicate that a 1% increase in the digital financial inclusion, measured by the Peking University Digital Inclusion Index, increases agricultural trade during the COVID-19 pandemic by approximately 1.6%. Furthermore, heterogeneous protective effects exist between regions in China. Digital financial inclusion is more effective in the Eastern regions in protecting the ASC than in other regions. This paper enriches the understanding of financial inclusion in helping agriculture supply chain recovery.

Keywords

• digital financial inclusion
• agricultural trade
• rural e-commerce
• COVID-19