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Digital finance, household income mobility, and common prosperity

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  • Tao, Kan
  • Quayson, Matthew

Abstract

This paper utilizes balanced panel data from three periods (2018, 2020, and 2022) of the China Family Panel Studies (CFPS) conducted by Peking University to analyze the mechanism through which digital finance affects common prosperity from the micro-level of households and individuals. The study finds that digital finance significantly reduces the Gini coefficient of residents' income, exerting a positive impact on common prosperity. However, its effects exhibit heterogeneity: the breadth of coverage may exacerbate income inequality in the short term, while the depth of use and the degree of digitization demonstrate more pronounced inclusive effects. The effects are stronger in the central and western regions than in the eastern region, with the western region benefiting the most. Income mobility, as a core mediating variable, plays a partial mediating role in digital finance's promotion of common prosperity.

Suggested Citation

  • Tao, Kan & Quayson, Matthew, 2025. "Digital finance, household income mobility, and common prosperity," Finance Research Letters, Elsevier, vol. 86(PE).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pe:s1544612325019968
    DOI: 10.1016/j.frl.2025.108742
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    References listed on IDEAS

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