The Impact Of Digital Financial Inclusion Development On The Farmers’ Household Financial Vulnerability

Household financial vulnerability is an important perspective to measure the financial risks of the household sector,and it is also a leading indicator of macro-financial stability.Due to the increasing debt leverage ratio of rural residents and the serious financial exclusion,the problem of rural residents’ household financial vulnerability has become more prominent.Therefore,exploring a new mechanism to effectively reduce the farmers’ household financial vulnerability is of great significance to improve household financial security and win the battle against major risks.In recent years,the development of digital financial inclusion has significantly improved the penetration and coverage of modern financial services,provided farmers with equal opportunities to enjoy financial products and services,and effectively alleviated the financial exclusion of rural residents.However,due to the short time for digital financial inclusion in my country,there are still various problems in the development process.In view of this,it is of great significance to study whether the development of digital financial inclusion could effectively reduce the farmers’ household financial vulnerability.First of all,this paper analyzes the influence mechanism of the development of digital financial inclusion on the farmers’ household financial vulnerability by sorting out the existing literature and relevant theories on digital financial inclusion and household financial vulnerability,and holds that the development of digital financial inclusion could affect the farmers’ household financial vulnerability through two mechanisms,namely,the direct mechanism of lowering the threshold and reducing exclusion,and the indirect mechanism of promoting economic growth and improving financial literacy.Then,based on the data of the Peking University Digital Financial Inclusion Index and the China Family Panel Studies(CFPS),this paper uses the Ordered Profit model to test the influence mechanism of the development of digital financial inclusion on the farmers’ household financial vulnerability by constructing the financial vulnerability index of rural households.Empirical analysis finds that: Firstly,the development of digital financial inclusion could reduce the farmers’ household financial vulnerability,and has a greater effect on farmers with the most serious household financial vulnerability.Secondly,compared with the degree of digitalization,the coverage and depth have a greater impact on the farmers’ household financial vulnerability.Thirdly,the heterogeneity analysis shows that the development of digital financial inclusion has a significant impact on the farmers’ household financial vulnerability in the central and western regions,but it is not significant in the eastern region.In addition,the development of digital financial inclusion has a significant impact on the farmers’ household financial vulnerability of all ages,but the impacts are different.Fourthly,the mechanism analysis shows that the financial literacy of farmers and economic growth have played a significant intermediary role.On this basis,this paper puts forward the following policy recommendations: Firstly,we should improve the coverage and depth of digital financial inclusion in rural areas.Secondly,policy makers should focus on increasing the development of digital financial inclusion in the central and western regions.Thirdly,financial institutions need to build a digital inclusive financial service system that varies from person to person.Fourthly,we should comprehensively improve the financial literacy of farmers.