Research On The Effect Of The Development Of Digital Finance On The Relationship Between Monetary Policy And Income Inequality

Income inequality is one aspect of the main contradiction of insufficient and unbalanced economic development in China.How to narrow this gap is also a matter of great concern to the party and the government.In previous studies,there are many literatures on the causes of income inequality,among which monetary policy is one of the topics widely concerned by all walks of life.In addition,there are new changes in the current financial system.The development of digital technology promotes the development of financial development towards digital mode,and gives birth to the emergence and development of digital finance.This change has an important impact on moderating the relationship between monetary policy and income inequality.Based on the review and analysis of previous literatures,this paper combs the factors affecting income inequality,and finds that urban-rural dual economic structure,economic growth,monetary policy,the development level of digital finance and other factors will affect income distribution,which will lead to the change of the degree of income inequality.Firstly,at the theoretical level,it analyzes how the tightening and expansionary monetary policy can expand income inequality through three channels: asset income,wage income and profit distribution.Secondly,it introduces the factor of digital finance into the relationship between the two,and analyzes how digital finance can play its reverse moderating role in the relationship between the two through three channels: financial market friction,financing cost and social innovation and entrepreneurship.Then,through the panel data of 31 provinces in China for 10 years,this paper establishes a fixed effect model for empirical analysis.The empirical results show that tight monetary policy will expand income inequality,while contrary to the theoretical analysis,expansionary monetary policy will help to reduce income inequality,and the emergence and development of digital finance weaken the above effects.According to the results,this paper puts forward suggestions from three aspects: how to promote the multiple positive effects of monetary policy,the healthy development of digital finance and the promotion of multiple equal opportunities.To be specific,the central bank should promote the multiple roles of monetary policy;the main body of digital finance should make efforts in further research and development to ensure the availability of digital financial services;and the government should do a good job in the supervision of the main body of digital finance and promote the improvement of relevant laws and regulations;individual investors should improve their own accomplishment;the government and financial institutions should work together to promote equal opportunities for residents in investment,education,employment,innovation and entrepreneurship.