Research On The Influence Of Digital Financial Inclusion On Urban-rural Income Gap

In 2021,China has comprehensively built a well-off society,historically solved absolute poverty problems.However,the problem of unbalanced and insufficient development in China is still highlighted,and there is a large gap between urban and rural regional development and income distribution,which is not only detrimental to the stability and long-term development of the economy,but also has a negative impact on social stability and harmony.Inclusive finance is an important starting point to narrow the urban-rural income gap,however,there are still some problems in the process of development,such as service imbalance,few product types and demand mismatch,poor business sustainability and so on.In recent years,China’s digital inclusive finance has developed rapidly.It improves the availability and convenience of financial services,and provides new ideas and methods to overcome the difficulties in the field of inclusive finance.At the same time,although China’s urban-rural income gap is still large,there has been a convergence trend in recent years,which makes people wonder: has digital inclusive finance played an important role? If so,how great is the impact? How does it affect? Therefore,this paper aims to explore these problems qualitatively and quantitatively based on economic theories and methods.The development of digital inclusive finance weakens the exclusion effect of traditional finance and enhances the poverty reduction effect of inclusive finance,thus narrowing the urban-rural income gap.In terms of reducing the exclusion effect,on the one hand,the development of digital inclusive finance expands the coverage of financial services,making small and micro enterprises,low-income people and other vulnerable groups included in the scope of services,and the improvement of coverage breadth objectively weakens the supply exclusion of financial services.On the other hand,diversified financial products and services such as payment,monetary fund,credit,insurance,investment and credit investigation create conditions for improving the use depth of customers.Meanwhile,the application of digital technology enables users to understand the functions,rates,and conditions of financial products through mobile terminals,reducing the cost of using financial services in traffic and time.This enhances the subjective willingness of vulnerable groups to seek credit and other financial services,alleviates the problem of self-exclusion and insufficient effective demand.The weakening of supply exclusion and self-exclusion promotes the reasonable distribution of financial resources in urban and rural areas,serves the financial inclusion subjects more effectively,and plays a positive role in narrowing the urban-rural income gap.In terms of enhancing the poverty reduction effect,on the one hand,digital technology helps inclusive finance expands its coverage and reduces the cost for financial institutions to obtain "long tail" customers,and meanwhile reduces the operating cost of physical outlets.The transformation of service mode brought by financial technology improves the efficiency of financial services and reduces the expenses of front-line service personnel.On the other hand,the application of big data,cloud computing and other technologies in inclusive finance and the increase of credit investigation channels enable financial institutions to analyze users’ credit characteristics and risk preferences from multiple dimensions,reducing the degree of information asymmetry and risk control cost.The joint action of the two aspects reduces the supply cost of financial services.At the micro level,this alleviates the multidimensional liquidity constraints of poor farmers and small and micro enterprises,such as smooth consumption,innovation and entrepreneurship,expanding production,and reduces the cost of using financial services,which is conducive to enhancing risk resistance,increasing residents’ income and poverty alleviation.At the macro level,digital inclusive finance improves the efficiency of financial transactions,promotes the financing and rational allocation of financial resources,provides more economic opportunities for employment and entrepreneurship for low-income groups,enhances the ability of "hematopoiesis",contribute to the promotion of industrial development,thereby promoting inclusive growth and poverty alleviation,indirectly shorten the urban-rural income gap.Based on the theoretical analysis and the panel data of 31 provinces and cities in China from 2011 to 2020,this paper makes an empirical analysis by comprehensively using mixed regression model,fixed-effect model,random-effect model,panel threshold model and instrumental variable method.The study found that the development of digital inclusive finance can significantly narrow the urban-rural income gap,1 unit increase in the digital inclusive finance index can narrow the income gap by 0.108%.Digital inclusive finance acts on the urban-rural income gap through two mechanisms: weakening the exclusion effect of traditional finance and enhancing the poverty reduction effect of inclusive finance,and its effect has significant regional heterogeneity.What’s more,the effect of digital inclusive finance on the urban-rural income gap has a phased feature,namely the threshold effect.When the digital inclusive finance index spans the threshold of 305.5,the effect increases by 15.7%.This study provides useful thoughts for departments to narrow urban-rural income gap and promote the balanced development by means of inclusive finance.It also has certain practical significance for digital inclusive finance to better integrate into the rural revitalization strategy,consolidate the achievements of poverty alleviation and promote the common prosperity of farmers and rural areas.