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Impacts of Digital Financial Inclusion on Urban–Rural Income Disparity: A Comparative Research of the Eastern and Western Regions in China

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  • Jing Liu

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia
    Faculty of Economics and Management, Weifang Institute of Technology, Weifang 262500, China)

  • Chin-Hong Puah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

  • Mohammad Affendy Arip

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

  • Meng-Chang Jong

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

Abstract

This study aims to investigate the influence of digital financial inclusion on China’s urban–rural income disparity. A comparative analysis on income differences between western and eastern regions in China was conducted in this paper. The study utilized a static panel approach as it consisted of 22 provinces in China that covered the period from 2011 to 2020. This paper employs Stata software for the data analysis. The dependent variable of this study is the urban–rural income gap. Meanwhile, the independent variables consist of the total index level, breadth of coverage, depth of use, degree of digitization, digital payment level, digital insurance level, and digital credit level. The control variables employed in this article are education level, financial support, economic transformation, technological progress, and trade openness. The empirical outcomes indicate that the seven independent variables potentially minimize the urban–rural income gap between the two regions. However, digital financial inclusion appears to have a more significant effect in lessening the urban–rural gap in the western region compared to the eastern region in China. The findings demonstrate that all the variables exhibit a higher degree of influence on the urban–rural income differences in the west than in the east, except for the credit index. The outcome reveals that the effect of the credit index in the western region (0.10%) is slightly lower than the eastern region (0.11%). In general, the present findings can provide valuable insights for policy makers in their efforts to address the urban–rural income gap in the two regions through the implementation of digital financial inclusion initiatives. The study should be conducted regularly to observe the trend of the income disparities between the western and eastern regions in China. Future studies can also focus on other regions or narrow the focus to provincial and city levels to capture more detailed information.

Suggested Citation

  • Jing Liu & Chin-Hong Puah & Mohammad Affendy Arip & Meng-Chang Jong, 2023. "Impacts of Digital Financial Inclusion on Urban–Rural Income Disparity: A Comparative Research of the Eastern and Western Regions in China," Economies, MDPI, vol. 11(11), pages 1-14, November.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:11:p:282-:d:1280530
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    1. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
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