Whether Digital Financial Inclusion Can Alleviate Household Financial Vulnerability

With the successful convening of the 20 th National Congress of the Communist Party of China,strengthening and improving modern financial supervision,strengthening the financial stability guarantee system,and guarding against systemic risks have become important prerequisites and inevitable requirements for our country to develop a highquality financial system.Among them,our country has achieved important results in deepening the reform of the financial system,promoting the coordinated development of the regional economy,and comprehensively eliminating absolute poverty of households in the prevention of systemic risks.However,due to the long-term existence of the urbanrural dual structure in our country,the widening household income gap between regions,the unbalanced household asset allocation,and the credit constraints caused by financial exclusion are further exacerbating the occurrence of household financial vulnerability,which is not conducive to our country’s economy in the long-time development.The coordinated development of China has hindered the progress of country’s financial prevention and poverty alleviation.As an inevitable choice for Chinese financial development,digital inclusive finance promotes the availability of financial services for urban and rural residents,lowers the threshold for investment and financing,and has a significant impact on household residents’ production activities and economic behavior.Therefore,it is of great significance for our country’s household risk prevention and financial technology development to explore whether the macro strategic measure of digital financial inclusion has alleviated the occurrence of household financial vulnerability.In terms of empirical evidence,based on the sample data of 25 provinces,116prefecture-level cities,and 6142 households in the China Health and Retirement Longitudinal Survey(CHARLS),based on the measurement of household financial vulnerability and its control variables,this paper constructs a Probit Panel empirical model to empirically test the proposed theoretical assumptions.In the empirical test,time and region were fixed bidirectionally in the baseline regression,and at the same time,the endogeneity problem was overcome through instrumental variables,and the effect of digital financial inclusion in alleviating household financial vulnerability is tested.In addition,to demonstrate the mechanism hypothesis of this paper,this paper conducts a mechanism test by using the mediation effect model,and explores the role of credit constraints、entrepreneurship and income generation and risk asset allocation.The results of this paper show that:(1)Digital financial inclusion has a significant mitigation effect on household financial vulnerability.(2)Digital financial inclusion can alleviate household financial fragility by reducing credit constraints,promoting household entrepreneurship,and optimizing household asset allocation.Among them,the intermediary effect of credit constraint mechanism and income mechanism is more significant.(3)Through heterogeneity analysis,this paper finds that two influencing factors,the regional development level and the education level of the household head can have different effects on household financial vulnerability between different groups.Specifically,compared with households in the central and western regions,digital inclusive finance has a more obvious effect on alleviating the financial vulnerability of households in the eastern region;and in terms of the education level of the head of the household,the households with high education level are better than those with low education level on alleviating the financial vulnerability.In addition,due to the impact of the digital divide,digital inclusive finance may have a slightly less mitigating effect on the elderly than the middle-aged.