Research on the Mechanism of Digital Skills for Enhancing Farmers’ Participation in Formal Financial Markets

Exploring the factors and mechanisms influencing farmers’ participation behavior in formal financial markets is of great significance for improving the rural financial service system and comprehensively promoting the development of rural inclusive finance. Based on the data from the 2020 China Rural Revitalization Survey (CRRS), this paper explores the impact and mechanism of digital skills on farmers’ participation in formal financial markets through the theories of feasibility information, social capital, and technology acceptance. The research results show that digital skills significantly promote farmers’ likelihood and extent of participation in formal financial markets, including stocks, bonds, and wealth management products. This is because digital skills enhance farmers’ information acquisition and online transaction capabilities and broaden their social networks. Heterogeneity analysis reveals that digital skills exert a greater influence on both the likelihood and extent of participation of farmers with lower educational level, farmers in the middle-aged and elderly cohorts, and farmers with low income in formal financial markets. Further research reveals that participating in formal financial markets can significantly increase farmers’ annual income. Therefore, training should be strengthened to enhance farmers’ digital skills. Open information platforms should be established to broaden channels, gradually enabling farmers to freely acquire information, reducing the cost of maintaining social networks for farmers, and improving the convenience of farmers’ online transactions. In addition, efforts should be made to promote the development of inclusive finance, focus on the differentiation issues of farmers in information and wealth, and thereby more widely enhance farmers’ participation in formal financial markets.