IDEAS home Printed from https://ideas.repec.org/a/eee/finlet/v71y2025ics1544612324014843.html

Financial development, electronic payments, and residents' consumption: Evidence from rural China

Author

Listed:
  • Huang, Zengjian
  • Wang, Leyi
  • Yu, Wensong

Abstract

The development of rural finance, by providing convenient credit, introducing modern financial services, and improving electronic payment systems, addresses the financial needs of rural residents, fosters the growth of rural industries, and improves the quality of life. This study utilizes provincial panel data from China covering the period 2011 to 2021 to examine the impact of rural financial development on the consumption levels of rural residents. The findings indicate that rural financial development exerts a significant positive influence on rural consumption, with rural electronic payments serving as a transmission mechanism in this relationship. A heterogeneity analysis further reveals that the effect of rural financial development on consumption levels differs according to the level of digital financial inclusion. Specifically, the positive impact is more pronounced in provinces with higher levels of digital financial inclusion compared to those with lower levels.

Suggested Citation

  • Huang, Zengjian & Wang, Leyi & Yu, Wensong, 2025. "Financial development, electronic payments, and residents' consumption: Evidence from rural China," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014843
    DOI: 10.1016/j.frl.2024.106455
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1544612324014843
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.frl.2024.106455?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Yang Liu & Chunyu Liu & Mi Zhou, 2021. "Does digital inclusive finance promote agricultural production for rural households in China? Research based on the Chinese family database (CFD)," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 13(2), pages 475-494, January.
    2. Yang Liu & Chunyu Liu & Mi Zhou, 2021. "Does digital inclusive finance promote agricultural production for rural households in China? Research based on the Chinese family database (CFD)," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 13(2), pages 475-494, January.
    3. Hu, Yue & Liu, Chang & Peng, Jiangang, 2021. "Financial inclusion and agricultural total factor productivity growth in China," Economic Modelling, Elsevier, vol. 96(C), pages 68-82.
    4. Tian Liu & Guangwen He & Calum G. Turvey, 2021. "Inclusive Finance, Farm Households Entrepreneurship, and Inclusive Rural Transformation in Rural Poverty-stricken Areas in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(7), pages 1929-1958, May.
    5. Taoyong Su & Yuzhu Yu & Yongheng Chen & Jian Zhang, 2019. "The Experience, Dilemma, and Solutions of Sustainable Development of Inclusive Finance in Rural China: Based on the Perspective of Synergy," Sustainability, MDPI, vol. 11(21), pages 1-18, October.
    6. Yuting Shi & Qiuwang Cheng & Yizhen Wu & Qiaohua Lin & Anxin Xu & Qiujin Zheng, 2023. "Promoting or Inhibiting? Digital Inclusive Finance and Cultural Consumption of Rural Residents," Sustainability, MDPI, vol. 15(3), pages 1-21, February.
    7. Heping Ge & Lianzhen Tang & Xiaojun Zhou & Decai Tang & Valentina Boamah, 2022. "Research on the Effect of Rural Inclusive Financial Ecological Environment on Rural Household Income in China," IJERPH, MDPI, vol. 19(4), pages 1-16, February.
    8. Heping Ge & Bowen Li & Decai Tang & Hao Xu & Valentina Boamah, 2022. "Research on Digital Inclusive Finance Promoting the Integration of Rural Three-Industry," IJERPH, MDPI, vol. 19(6), pages 1-18, March.
    9. Li, Jie & Wu, Yu & Xiao, Jing Jian, 2020. "The impact of digital finance on household consumption: Evidence from China," Economic Modelling, Elsevier, vol. 86(C), pages 317-326.
    10. Song, Quanyun & Li, Jie & Wu, Yu & Yin, Zhichao, 2020. "Accessibility of financial services and household consumption in China: Evidence from micro data," The North American Journal of Economics and Finance, Elsevier, vol. 53(C).
    11. Zhao, Chunkai & Wu, Yaqian & Guo, Jianhao, 2022. "Mobile payment and Chinese rural household consumption," China Economic Review, Elsevier, vol. 71(C).
    12. Claessens, Stijn & Djankov, Simeon & Lang, Larry H. P., 2000. "The separation of ownership and control in East Asian Corporations," Journal of Financial Economics, Elsevier, vol. 58(1-2), pages 81-112.
    13. Xue Wang & Guangwen He, 2020. "Digital Financial Inclusion and Farmers’ Vulnerability to Poverty: Evidence from Rural China," Sustainability, MDPI, vol. 12(4), pages 1-18, February.
    14. Zhang, Jiaping & Zhang, Huirong & Gong, Xiaomei, 2022. "Mobile payment and rural household consumption: Evidence from China," Telecommunications Policy, Elsevier, vol. 46(3).
    15. Qian, Zongxin & Tu, Yonghong & Zhou, Zinan, 2022. "The impact of financial development on the income and consumption levels of China’s rural residents," Journal of Asian Economics, Elsevier, vol. 83(C).
    16. Wenhai Zhou & Xiaoyu Zhang & Xiaomin Wu, 2024. "Digital inclusive finance, industrial structure, and economic growth: An empirical analysis of Beijing-Tianjin-Hebei region in China," PLOS ONE, Public Library of Science, vol. 19(3), pages 1-18, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Wei & Li, Jiawei, 2025. "Digital finance, consumer convenience, and rural residents’ consumption," Finance Research Letters, Elsevier, vol. 82(C).
    2. Wang, Haijing & Meng, Chao, 2025. "Digital finance and rural household consumption," Finance Research Letters, Elsevier, vol. 86(PG).
    3. Zhao, Qiao & Wang, Wangqing, 2025. "Digital transformation and rural financial development," Finance Research Letters, Elsevier, vol. 84(C).
    4. Qin, Yang & Liu, Wei, 2025. "Digital payment penetration and regional consumption inequality," Finance Research Letters, Elsevier, vol. 85(PD).
    5. Lihong Sun & Hui Shu, 2025. "Rural E-commerce Ecosystem Development Paths Amid Digital Business Enabling Agriculture: A fsQCA Based on CAS Theory," SAGE Open, , vol. 15(4), pages 21582440251, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mingzhao Xiong & Wenqi Li & Brian Sheng Xian Teo & Jaizah Othman, 2022. "Can China’s Digital Inclusive Finance Alleviate Rural Poverty? An Empirical Analysis from the Perspective of Regional Economic Development and an Income Gap," Sustainability, MDPI, vol. 14(24), pages 1-18, December.
    2. Yingzheng Yan & Liupeng Chen & Ziwei Zhou & Yuanzhu Wei, 2025. "Digital financial inclusion and agricultural modernization development in China—a study based on the perspective of agricultural mechanization services," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-11, December.
    3. Li, Bin & Pan, Ya, 2025. "Digital inclusive finance and rural entrepreneurial survival: The moderating role of digital and financial literacy," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 1119-1136.
    4. Yingzi Chen & Wanwan Yang & Yaqi Hu, 2022. "Internet Development, Consumption Upgrading and Carbon Emissions—An Empirical Study from China," IJERPH, MDPI, vol. 20(1), pages 1-23, December.
    5. Syed Ahsan Jamil & Ishfaq Hamid & Md Shabbir Alam & Showkat Ahmad, 2025. "Digitizing Prosperity: How Digital Finance Transforms Agricultural Incomes in China," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 32(2), pages 631-662, June.
    6. PU, Zhengning & FEI, Jinhua, 2022. "The impact of digital finance on residential carbon emissions: Evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 515-527.
    7. Dongjing Chen & Xiaotong Guo, 2023. "Impact of the Digital Economy and Financial Development on Residents’ Consumption Upgrading: Evidence from Mainland China," Sustainability, MDPI, vol. 15(10), pages 1-25, May.
    8. Wang, Yuyu & Zhao, Zengli & Lu, Chen, 2024. "Does digital inclusive finance increase land rent? Evidence from rural China," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1025-1043.
    9. Man, Guo & Haiyan, Yang, 2026. "Digital inclusive finance, spatial inequality, and household education investment," Finance Research Letters, Elsevier, vol. 91(C).
    10. Ruining Li & Qinghua Chen & Xiuhua Kang, 2025. "Impacts of Financial Literacy on Household Consumption Inequality: Panel Data from Chinese Households," Journal of Family and Economic Issues, Springer, vol. 46(3), pages 837-853, September.
    11. Pu, Zhengning & Liu, Jingyu & Yang, Mingyan, 2024. "The effect of digital technology on residential and non-residential carbon emission," International Review of Economics & Finance, Elsevier, vol. 95(C).
    12. Quan He & Wanglin Ma & Puneet Vatsa & Hongyun Zheng, 2024. "Impact of mobile payment adoption on household expenditures and subjective well‐being," Review of Development Economics, Wiley Blackwell, vol. 28(1), pages 264-285, February.
    13. Zhou, Qiuyang, 2024. "Does the digital economy promote the consumption structure upgrading of urban residents? Evidence from Chinese cities," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 543-551.
    14. Bingrou Huang & Shubin Zhu, 2025. "Does Financial Inclusion Have an Impact on Chinese Farmers’ Incomes? A Perspective Based on Total Factor Productivity in Agriculture," Sustainability, MDPI, vol. 17(11), pages 1-34, May.
    15. Lee, Chien-Chiang & Lou, Runchi & Wang, Fuhao, 2023. "Digital financial inclusion and poverty alleviation: Evidence from the sustainable development of China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 418-434.
    16. Zhang, Jiaping & Zhang, Huirong & Gong, Xiaomei, 2022. "Mobile payment and rural household consumption: Evidence from China," Telecommunications Policy, Elsevier, vol. 46(3).
    17. Yang Jingyi & Guo Xiaoyang & Zhang Xiuwu, 2024. "Analysis of the Effect of Digital Financial Inclusion in Promoting Inclusive Growth: Mechanism and Statistical Verification," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-18.
    18. Huang, Guangfeng & Wu, Shuying & Chen, Lishuang, 2025. "Research on differentiated empowerment mechanisms of digital finance and social security inputs on farmers' entrepreneurship - A deep analysis based on regional characteristics and threshold effects," International Review of Economics & Finance, Elsevier, vol. 102(C).
    19. Wang, Yao & Wu, Xuenan & Lin, Boqiang, 2025. "Empowering green households: How does digital finance influence household carbon footprints?," Research in International Business and Finance, Elsevier, vol. 76(C).
    20. Zhang, Yudong & Cui, Ruiqing & Wei, Xiaobei & Chen, Tianyong, 2025. "How digital financial inclusion enhances agroecological efficiency: Impact effects and mechanism tests," International Review of Economics & Finance, Elsevier, vol. 97(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014843. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/frl .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.