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Digital Financial Inclusion, Income Inequality, and Vulnerability to Relative Poverty

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  • Lijin Liu

    (Renmin University of China)

  • Lu Guo

    (Jiangxi University of Finance and Economics)

Abstract

Governing relative poverty is an indispensable part of achieving inclusive growth. Using data from the China Household Financial Survey, we scientifically investigate the impact of China's development of digital financial inclusion on household vulnerability to relative poverty. The research results show that the development of digital financial inclusion can significantly alleviate the vulnerability to relative poverty of households, and effectively prevent families from falling into a state of relative poverty in the future. The results of the heterogeneity analysis show that the effect of digital financial inclusion in mitigating vulnerability to relative poverty is greater in households with high population dependency ratios, digital tools, and household head education levels. In parallel, there are also significant regional differences in digital finance in mitigating the relative vulnerability of households. Further mechanism research found that the development of digital finance inclusion mainly reduces the probability of families falling into relative poverty in the future by alleviating income inequality, thereby improving the health status of family members, family development-oriented consumption, and family happiness.

Suggested Citation

  • Lijin Liu & Lu Guo, 2023. "Digital Financial Inclusion, Income Inequality, and Vulnerability to Relative Poverty," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 170(3), pages 1155-1181, December.
    • Handle: RePEc:spr:soinre:v:170:y:2023:i:3:d:10.1007_s11205-023-03245-z
    DOI: 10.1007/s11205-023-03245-z
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