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Digital inclusive finance, household leverage and household consumption

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  • Liu, Jing
  • Zhang, Nan

Abstract

Based on panel data from 30 provinces in China from 2012 to 2023, this paper systematically explores the impact mechanism of digital inclusive finance on rural residents' consumption levels. The study finds that digital inclusive finance significantly promotes rural residents' consumption through its breadth of coverage, depth of use, and degree of digitalization. Household leverage ratio, acting as a negative moderating variable, weakens the consumption-promoting function of digital finance through the effects of "income crowding-out," "precautionary savings," and "superimposed liquidity constraints." Resident income serves as the core transmission channel, with digital inclusive finance significantly boosting resident income by broadening financial service channels such as payment and credit, thereby indirectly driving consumption growth. Regional heterogeneity analysis indicates that due to its mature digital ecosystem, the eastern region exhibits a significant consumption-enabling effect of digital finance.

Suggested Citation

  • Liu, Jing & Zhang, Nan, 2025. "Digital inclusive finance, household leverage and household consumption," Finance Research Letters, Elsevier, vol. 86(PF).
    • Handle: RePEc:eee:finlet:v:86:y:2025:i:pf:s1544612325021336
    DOI: 10.1016/j.frl.2025.108880
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    References listed on IDEAS

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    Cited by:

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    2. Xu, Hao, 2026. "Unveiling the role of digital finance in technological catch-up: A multisector growth model with firm-level evidence," Economic Modelling, Elsevier, vol. 155(C).

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