Examining the Impact of Digital Inclusive Finance on Urban and Rural Consumption Patterns: Insights from China Household Finance Survey in 11 Coastal Regions

In the rapidly evolving global landscape characterized by digitization, and financial inclusion, digital inclusive finance emerges as a pivotal force influencing both urban and rural consumption patterns. Leveraging panel data spanning the period 2013 to 2019 from 11 coastal provinces and cities as obtained from the China Household Finance Survey (CHFS) and Peking University’s digital financial inclusion index, this study scrutinizes the impact of digital inclusive finance on the consumption structures of coastal urban and rural areas, thereby providing insights for economic growth. Notably, the age and education heterogeneity tests show that digital financial inclusion optimizes both the scale and structure of consumption in urban and rural settings, exhibiting a more pronounced effect on urban households compared to their rural counterparts. The investigation delves into the nuanced interplay of digital financial inclusion with social networks and financial literacy in shaping consumption structures by using the mediation effect model. Interestingly, the study reveals a reduction in high-closeness social network relationships, concurrently increasing urban households’ consumption scale. Furthermore, digital financial inclusion emerges as a catalyst for urban household consumption by diminishing high-closeness social network relationships, fostering low-closeness interactions, and promoting financial literacy. Similarly, it propels rural household consumption by augmenting both high-closeness and low-closeness interactions, elevating essential consumption, and enhancing financial literacy to bolster high-level considerations. Consequently, the findings advocate for governmental initiatives that harness digital transformation to advance financial inclusion and digitalization and establish a comprehensive, multi-level financial promotion system, thereby fostering consumption upgrades and stimulating economic growth.