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Analyzing the Impact of Digital Inclusive Finance on Poverty Reduction: A Study Based on System GMM in China

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  • Xiaowen Xie

    (Graduate School of Development Economics, National Institute of Development Administration, 148 Serithai Road, Bangkok 10240, Thailand
    International College, Krirk University, Bangkok 10220, Thailand)

Abstract

This study investigates the potential of digital financial inclusion to reduce regional poverty in China, an issue that has received varying opinions from the academic community. Using panel data from 31 provinces, municipalities, and autonomous regions (2011–2020) and employing the system GMM, this paper analyzes the dynamic relationship between regional poverty and the growth of digital financial inclusion, as measured by the ‘Peking University Digital Financial Inclusion Index’. Controlling for factors such as the Gini coefficient, industrial structure, financial support for agriculture and education, and economic openness, this research finds that digital financial inclusion has a marked ability to reduce poverty rates. Moreover, our results indicate an intergenerational transmission characteristic in poverty, where prior levels significantly influence current poverty incidence. The study concludes that the recent acceleration of digital financial inclusion can be harnessed for meaningful poverty reduction. This study’s policy recommendations highlight the need for financial development to foster industrial and social growth and stress the importance of financial education for low-income populations. Additionally, it calls for increased management and oversight of inclusive and agricultural digital financial products and services.

Suggested Citation

  • Xiaowen Xie, 2023. "Analyzing the Impact of Digital Inclusive Finance on Poverty Reduction: A Study Based on System GMM in China," Sustainability, MDPI, vol. 15(18), pages 1-20, September.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:18:p:13331-:d:1233657
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    References listed on IDEAS

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