The Research On The Effect Of Digital Financial Inclusion On Household Consumption

At the Fifth Plenary Session of the 19th CPC Central Committee,General Secretary Xi Jinping proposed to “speed up the formation of a new development pattern which is mainly based on domestic cycle,and is mutually reinforced by domestic and international cycles”.This new policy indicates that Chinese economic growth has transferred from investment-driven and exports-driven into consumption-driven.This is a scientific decision based on the significant changes in domestic and external environments.Household consumption can not only provide driving force for economic growth,but also provide job vacancies and promote industrial upgrade in developing countries.However,for a long time,Chinese savings rate has been too high and household consumption has been insufficient.Therefore,expanding household demand and increasing household consumption will be important strategies for Chinese economic development in the future.Increasing financial support for consumption and promoting household consumption upgrade will become top priorities.As the latest form of financial development,digital financial inclusion can overcome the shortcomings of traditional finance and enables the disadvantaged to get access to affordable financial services,which provides a solution to the dilemma of insufficient demand.The impact of digital financial inclusion on household consumption is therefore a concern of both academia and industry.In order to promote the development of digital financial inclusion,increase household total consumption,upgrade household consumption structure and narrow household consumption gap,this thesis follows the structure of “Theoretical basis-Status analysis-Mechanism analysis-Empirical research-Policy suggestion”.Based on this,the thesis firstly defines the meanings of digital financial inclusion and household consumption and describes related theories;based on the current situation of digital financial inclusion and household consumption,the thesis then systematically analyses the mechanisms of how digital financial inclusion affects household consumption from the perspectives of household total consumption,household consumption structure and household consumption gap;using spatial econometric model,QUAIDS model and threshold model,respectively,the thesis empirically tests the effect of digital financial inclusion on household consumption,effect mechanisms and effect heterogeneity;lastly,the thesis puts forward policy suggestion to promote the development of digital financial inclusion and boost domestic demands.More specifically,this thesis contains three parts:Firstly,theoretically analyses how digital financial inclusion affects household consumption.The thesis describes research background and its significance,sorts out relevant literature,comes up with structure and research methods,defines the concepts of digital financial inclusion and household consumption,and analyses current situation.Based on these,and also combined with fundamental theories,this thesis concludes mechanisms of how digital financial inclusion affects household consumption from three dimensions,that are household total consumption,household consumption structure and household consumption gap.As for household total consumption,digital financial inclusion can affect it through payment smoothing mechanism,budget smoothing mechanism,safeguard mechanism and growing mechanism.As for household consumption structure,digital financial inclusion can affect it by changing household consumption concepts,changing their consumption habits,enriching consumption choices and improving consumer environment.As for household consumption gap,digital financial inclusion can affect it through “digital divide” effect or “digital dividend” effect.Secondly,empirically tests the effect of digital financial inclusion on household consumption.Based on provincial data and household data,applying spatial econometric model,QUAIDS model and threshold model,respectively,this thesis empirically studies the influence of digital financial inclusion on household consumption,impact mechanisms and impact heterogeneity.The results show that:(1)the development of digital financial inclusion can increase domestic household total consumption,while decrease household total consumption of nearby places.It can increase domestic household total consumption through payment smoothing mechanism and budget smoothing mechanism.The effect of digital financial inclusion on household total consumption is more considerable for rural households than for urban households.(2)The development of digital financial inclusion significantly reduces the proportion of food expenditure and promotes household consumption upgrade.It promotes household consumption upgrade by changing household consumption concepts,diversifying their consumption choices and improving consumption environment.Payment and credit services are well-developed.Compared with investment service,monetary fund service has lower threshold and wider users.As a results,these four services can promote household consumption upgrade.Digital financial inclusion can only facilitate consumption upgrade of households whose heads are middle-aged.It is probably because they do not tend to save and have to spend money in specific areas.(3)The development of digital financial inclusion can widen the consumption gap between the disadvantaged and the mainstream,thus forming “digital divide”.Differences in risk appetite caused by “knowledge gap” and“tool exclusion” due to the unbalanced development of digital infrastructure may lead to “digital divide”.Compared with other services,payment,credit and insurance started earlier,with more basic functions and higher popularity.Therefore,these three services may widen the consumption gap of different consumer groups.Thirdly,puts forward policy suggestion at macro,medium and micro levels based on theoretical analyses and empirical studies.At macro level,the government should improve related laws,regulatory system and social insurance;at medium level,financial companies should innovate digital financial inclusion services,coordinate their development,improve supporting facilities,strengthen publicity and stick to the principle of serving real enterprises;at the micro level,financial knowledge should be popularized and advanced consumption concepts should be established.