Mitigating Rural Multidimensional Poverty Through Digital Inclusive Finance: Real Improvement and Psychological Empowerment

Digital inclusive finance (DIF) is regarded as a key instrument in poverty alleviation efforts. However, existing research reveals significant gaps in understanding its poverty-reduction impact: the debate on its inclusivity remains unresolved, its mechanisms of action are unclear, and the psychological empowerment dimension has been largely overlooked. Using micro-level data from seven waves of the China Family Panel Studies (CFPS) from 2010 to 2022, this study employs fixed-effect models, quantile regression models, and mechanism analysis to explore the differentiated impact of digital inclusive finance on rural multidimensional relative poverty and the mechanisms at play. The empirical findings reveal that DIF significantly mitigates multidimensional relative poverty, with more pronounced marginal effects among the poorest households, confirming its pro-poor characteristics. Heterogeneity analysis reveals that, at the regional level, DIF has greater impacts in western regions and remote rural areas farther from county centers; at the individual level, it is particularly effective for women, those with lower education, and individuals with limited digital literacy. Mechanism analysis shows that DIF operates through three channels: promoting employment, encouraging entrepreneurship, and enhancing financial accessibility. Moreover, extended analysis demonstrates that DIF also fosters the endogenous motivation of rural households to escape poverty, as reflected in heightened confidence about the future, increased belief in social mobility and returns of work, and reduced perceived barriers to employment. These findings provide new micro-level evidence to unpack the poverty-alleviation potential of DIF.