Research On The Impact Of Digital Inclusion Finance On Household Leverage In China

In the last decade,digital inclusive finance has gradually come into the public’s view by virtue of its convenience,wide coverage and low threshold.The emergence of digital inclusive finance has undoubtedly changed the financial landscape of contemporary China,both at the macro policy level and at the micro enterprise and household levels.As for the household level,whether it is the paperless payment channels of We Chat Pay,Alipay Sweep and the central bank’s digital currency,or the micro-credit products such as Flower Chant,Debit Chant,Jingdong White Stripe and various commercial banks’ credit card services,these new types of digital financial services have greatly reduced the liquidity constraints faced by households,improved their financial accessibility and eased their uncertainties faced by households,making it easier for residential households to participate in the formal financial market.However,as the development of digital inclusive finance brings more financial services,the household leverage ratio of Chinese residents is also increasing year by year,which has undoubtedly become a hidden concern for the stability of China’s financial system.Based on this,this paper explores whether the development of digital inclusive finance has,to a certain extent,increased the leverage ratio of Chinese households and tries to find its impact mechanism by matching the Beijing University Digital Inclusive Finance Index(2011-2020)with the sample households of the China Household Finance Survey(CHFS)in 2015,2017 and 2019 as research objects.The research ideas of this paper are as follows: First,we comb through the literature on digital inclusive finance and household leverage to find the measurement of the two and the related influencing factors.Secondly,we analyze the relationship between digital inclusive finance,consumption and excessive consumption,and household leverage at the theoretical level,and examine the impact of the development of digital inclusive finance on household leverage by considering consumption and excessive consumption as the transmission mechanism.Again,the paper further analyzes the financial accessibility and uncertainty faced by households at the theoretical level and tries to identify the"digital inclusive finance-financial accessibility-household leverage" and "digital inclusive finance-financial accessibility-household leverage"."and "digital financial inclusion-uncertainty-household leverage" mechanisms.Finally,this paper constructs panel Probit model,panel Tobit model and two-way fixed effects model using micro financial data of a total of 111,614 sample households from the three-year CHFS survey and the lagged one-period digital inclusive finance index and conducts corresponding empirical analysis and proposes corresponding policy recommendations based on the empirical results.This paper shows that:(1)the development of digital inclusive finance can indeed have a positive and significant impact on the increase of household leverage in China.Specifically,for each standard error in the digital inclusion index,the probability of households choosing to engage in debt increases by about 2.3% to4.7%,and the leverage ratio of indebted households increases by about 9% to 10%.(2)The development of digital financial inclusion has a significant positive effect on households’ consumption and excessive consumption and can increase the leverage ratio of households by expanding their consumption and causing them to over-consume,thus seeking more debt.(3)By regressing the whole sample according to the level of financial accessibility,we find that digital inclusive finance has a greater positive contribution to the leverage ratio of the sample households when the financial accessibility of households is lower,which confirms that the development of digital inclusive finance can increase the leverage ratio of households through the "digital inclusive finance-financial accessibility-household leverage ratio".(4)By regressing the whole sample grouped by the level of uncertainty,we find that digital inclusive finance positively contributes more to the leverage ratio of the sample households when they face higher uncertainty,confirming that the development of digital inclusive finance can influence the increase of household leverage ratio through the mechanism of "digital inclusive finance-uncertainty – household leverage".(5)The reliability of the paper’s results is demonstrated by introducing the interaction term between the distance of the sample household’s city to Hangzhou and the mean value of the digital inclusion index as an instrumental variable for endogeneity discussion and conducting robustness tests and heterogeneity analysis on the sample.The possible innovations of this paper are:(1)When combing through the existing literature on digital inclusive finance development and household financial activities,it is found that there is little literature on micro-level household leverage,and even less literature on the impact of digital inclusive finance development and household leverage.The focus on the development of digital inclusive finance without focusing on the rational use of guidance for households will lead to a rapid increase in the leverage ratio of the household sector,which will eventually affect the financial stability of the country.(2)In this paper,we distinguish the debt channels of households,and divide the total household debt into the amount of credit applied from formal financial institutions and the amount of borrowing from friends and relatives,so that we can study the impact of digital inclusive finance on household leverage in a more focused way after excluding the amount of borrowing from friends and relatives.(3)This paper verifies the contribution of the development of digital inclusive finance to household leverage through three channels: consumption and excessive consumption,financial availability,and uncertainty faced by households,and analyzes the heterogeneity of sample households by urban and rural areas,by first-tier cities,by second-tier cities,and by third-tier cities and others to explore the differences in the impact of the development of digital inclusive finance on the leverage of different types of sample households.