Research On Impact Of Digital Inclusive Finance On Urban-rural Income Gap

The 20 th Party Congress was held to mark that China has fully constituted a moderately prosperous society,and China should continue to strive towards the goal of achieving common prosperity for all people and building a strong socialist modern country since retaining the achievements of winning the battle against poverty.In recent years,the per capita disposable income of China’s residents has been growing,with the income level of farmers growing faster than that of urban residents.However,the problem of unbalanced and insufficient development in China is still prominent,and the regional gap,urban-rural gap and income gap are still obvious.The absolute urban-rural income gap has expanded to 28,000 yuan by 2021 after breaking through 10,000 yuan in 2008,and the income gap between urban and rural areas is still large.Digital inclusive finance is a new type of inclusive finance that balances efficiency and fairness,which is conducive to alleviating the problem of information asymmetry and reducing financial transaction costs,while using digital technology to expand financial coverage.Therefore,it is of great theoretical value and practical significance to study the impact effect and mechanism of digital inclusive finance in promoting residents’ income increase and narrowing the income gap between urban and rural areas.This paper employs data from 31 provinces(municipalities and autonomous regions)in China to empirically investigate the impact mechanism of digital inclusive finance on urban and rural residents’ income and its gap.The study utilizes a fixed-effect model,mechanism test model,threshold effect model,and sub-sample regression model.The findings indicate that:(1)Digital inclusive finance contributes to the improvement of residents’ income and the narrowing of the urban-rural income gap,with a higher promotion effect in the central and western regions of China.(2)The analysis of the transmission mechanism based on urban-rural entrepreneurial activity reveals that digital inclusive finance significantly promotes entrepreneurial activity,particularly among rural residents,and that entrepreneurial activity can narrow the urban-rural income gap.The effect of digital inclusive finance on promoting farmers’ entrepreneurial activity and income level is better in the central and western regions.(3)There is a threshold effect of digital inclusive finance development on narrowing the urban-rural income gap.The study demonstrates that digital inclusive finance can only contribute to narrowing the urban-rural income gap when the level of digital inclusive finance development,breadth of coverage,and degree of digitization cross the threshold.However,the depth of digital inclusive finance use will weaken the contribution effect after crossing the threshold.(4)The findings demonstrate that digital inclusive finance is more effective in promoting farmers’ income growth and significantly reducing the urban-rural income gap.Moreover,the study indicates that the level of digital inclusive finance development has a significant boosting effect on farm household income.The findings,based on four periods of CFPS micro farm household data from 2012 to 2018,further reveal heterogeneity in this effect,with a greater impact on farm households with high human and physical capital,as well as high financial assets.Based on our research findings,this paper proposes targeted countermeasure recommendations to enhance the utilization of income and entrepreneurship effects of digital inclusive finance in order to reduce the urban-rural income gap.Currently,there is a growing body of research concerning digital inclusion finance,with some literature focusing on the impact of digital inclusion finance on the urban-rural income gap.However,there has been less exploration of entrepreneurial activity as an intermediate variable,particularly from the perspective of the differences in entrepreneurship between urban and rural residents.This paper aims to examine the positive effects and inclusive characteristics of digital inclusive finance development in reducing the urban-rural income gap and regional income gap through various empirical models.It also aims to reveal the transmission role of urban-rural entrepreneurial activity and its heterogeneity in the impact of digital inclusive finance development on income and income gap among urban-rural residents.Additionally,this paper aims to explore the differences in the effects of digital inclusive finance on household income enhancement among farming households,which can inform related policy strategies.This study holds reference value for policy-makers seeking to formulate effective strategies.