Transformations  in
Business & Economics

DIGITAL FINANCE AND RURAL POVERTY IN CHINA: A CONTEXT-BASED STUDY ON THE URBAN-RURAL INCOME GAP³
Yazhen Zhang

ABSTRACT: Digital finance inclusiveness (DFI) is crucial for reducing poverty and preventing underprivileged groups from returning to poverty. Using panel data from 34 provinces in China from 2013 to 2023, this article empirically investigates the impact of DFI on poverty alleviation level of rural residents (PALR). For this purpose, the paper employs multiple regression analysis, threshold influence models, and mediation effect models. The study findings confirm that (1) DFI and its three sub-indicators (DID, DFI_U, and DFI_C) exert a significantly positive impact on PALR, and the derived results hold even when endogeneity is considered; (2) the regional heterogeneity analysis reflects that the DFI and its sub-indicators demonstrate the strongest impact on the PALR, while the proposal influences exhibit the least impact in the western and central zones; (3) the mediation influence test highlights that the DFI can indirectly support PALR in rural regions by not only fostering REGL but also by narrowing down the income gap between rural and urban population; and (4) the threshold influence analysis confirms that REGL exerts a double threshold impact on the PALR, and the proposed influence increases as the threshold value continues to rise. Consequently, this research article proposes policy implications for encouraging the DFI in rural regions, thereby supporting REGL, employing regionally differentiated strategies of poverty reduction based on the local situations, and narrowing the income gap between rural and urban residents.

KEYWORDS:  digital finance inclusiveness (DFI), poverty alleviation level of rural residents (PALR), threshold impact, regional economic growth level (REGL).

JEL classification:  G10, G20, C33, C36, P26, O30, I32.

³Acknowledgments:  This article is a phased research achievement of the project "Interactive Mechanism and Implementation Path Research on the Integrated Development of Urban and Rural Industries in Henan Province” funded by the Science and Technology Department of Henan Province (No 222400410092).