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Reducing farmers' poverty vulnerability in China: The role of digital financial inclusion

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  • Bo Yang
  • Xiangnan Wang
  • Tong Wu
  • Weihua Deng

Abstract

This paper applies exogenous shocks to investigate the impact of digital financial inclusion (DFI) on farmers' poverty vulnerability in China. We find that farmers in highly developed DFI areas are less vulnerable to the poverty trap. The result is robust to various checks, including propensity score matching and difference‐in‐differences method and the instrumental variable approach. Moreover, we find that income diversification is the possible economic channel through which DFI affects farmers' poverty vulnerability. Further analyses show that DFI has a “targeting” effect on those who are poor and vulnerable, and a synergistic effect by working with medical insurance and informal finance in terms of reducing farmers' poverty vulnerability. Our research findings provide new theoretical insights and useful guidance in enhancing financial inclusiveness and sustainable development in the post‐COVID‐19 era.

Suggested Citation

  • Bo Yang & Xiangnan Wang & Tong Wu & Weihua Deng, 2023. "Reducing farmers' poverty vulnerability in China: The role of digital financial inclusion," Review of Development Economics, Wiley Blackwell, vol. 27(3), pages 1445-1480, August.
    • Handle: RePEc:bla:rdevec:v:27:y:2023:i:3:p:1445-1480
    DOI: 10.1111/rode.12991
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