The Impact Of Digital Financial Development On Household Welfare

Eliminating poverty,improving people’s livelihood and realizing common prosperity step by step are the essential requirements of socialism.Since the reform and opening up,China’s economy has achieved rapid growth,and residents’ living standards have been continuously improved,but the problems affecting residents’ welfare in the process of development cannot be ignored.Currently,the social principal contradiction has been transformed into the contradiction between the people’s ever-growing needs for a better life and unbalanced and insufficient development.In this context,the problems of intra-family inequality,income and consumption inequality between households,and poverty vulnerability still exist,it is urgent to seek and establish effective family welfare improvement policies.The core of finance is the optimal allocation of existing resources or wealth,while the traditional financial system has many limitations in inclusiveness,efficiency and fairness.The reform of information technology has promoted the major innovation in the field of digital finance in China and profoundly changed people’s production and life style.Can the development of digital finance optimize the function of financial resource allocation,thereby contributing to the improvement of household welfare?Based on the perspective of family inequality and vulnerability,using the representative data of digital finance and the family data of China Family Panel Studies(CFPS)from 2012 to 2018,this paper adopts a variety of econometric models to deeply discusses the impact and internal mechanism of digital Finance on family welfare through theoretical and empirical research.First,from the perspective of consumption inequality,this paper examines the slowrelease effect of digital Finance on the degree of inequality among households within the region.This paper uses the data from the Peking University China Family Panel Survey and the Digital Financial Inclusion Index to estimate the regional "Consumption Gini Coefficient,Theil Index and the ratio of quantiles",based on which to explore the impact of digital financial inclusion on consumption inequality.The study found that digital finance can reduce the level of regional consumption inequality,especially the consumption gap between the middle and high consumption classes.This impact is mainly achieved through the three mechanisms of credit,payment and insurance.The above effect is even greater for regions with higher education levels,medium economic development and better Internet user bases.Based on the results of consumption structure decomposition and group decomposition,it is found that digital finance can reduce developmental and enjoyable consumption inequality and inequality between urban and rural areas.The findings of this article shows that digital finance can ease the contradiction between "needs for a better life" and "unbalanced and insufficient development" to a certain extent.The article provides important theoretical basis and policy references for optimizing digital financial services and releasing consumer vitality.Second,this paper examines the impact of the development of digital Finance on women’s bargaining power and intra-household inequality.According to the data of China Family Panel Studies in 2014,there are inequalities in the division of labor and resource allocation between men and women in China’s families.Empirical analysis finds that the development of digital finance in the area where the family is located significantly reduces the inequality within the family-the wife’s bargaining power in the family is improved and has more decision-making power over family affairs.This conclusion still holds even after using geographical distance and regional terrain slope as instrumental variables to solve endogenous problems.This paper explains the role channels from two levels:the first is that women themselves will pay more attention to personal and family finance through easily accessible digital financial services.The second is that the development of digital finance will change the demand for labor force in society and promote the breadth of women’s labor participation.The regression results of the subsample show that in rural families,families living with parents,having children,the first child is a boy,and the wife has a higher education level,digital finance has a greater effect on women’s bargaining power.This paper finds that it is beneficial to the policy-making of promoting gender equality and improving labor participation rate.Third,the impact and mechanism of this new model of inclusive finance on the achievement of poverty alleviation has not been thoroughly studied.Different from the static incidence of poverty,this paper uses the data from the Peking University China Family Panel Survey to estimate the household "poverty vulnerability",combined with the Digital Financial Inclusion Index of prefecture-level cities to explore the impact of digital finance on poverty vulnerability.The study found that the development of digital finance can reduce the probability of families falling into poverty in the future,and will help consolidate poverty alleviation achievements.This impact is mainly achieved through three mechanisms by optimizing asset allocation,improving financial literacy,and strengthening trust mechanisms to mitigate risk shocks,among which currency funds and investment businesses play a key role.This effect is more obvious for families in the central region,with higher material endowments and lower dependency ratios.Therefore,we need also pay attention to the "digital disadvantages" faced by some groups,strengthen universal education and digital infrastructure construction.The conclusions drawn in this paper based on the perspective of poverty vulnerability provide important reference and policy enlightenment for understanding the development effects of digital finance and poverty reduction issues.Fourth,the paper concludes with a summary of the main research findings and puts forward targeted policy recommendations.This paper believes that the development of digital finance is conducive to improving the level of family welfare,but at the same time,it is necessary to pay more attention to the accuracy of digital financial services,and to the new issues such as the digital divide that may restrict the role of digital finance.This paper attempts to provide important policy references for optimizing digital financial services,improving family welfare and promoting efficiency and equity.