Research On The Impact Of Digital Inclusive Finance On The Financial Vulnerability Of Chinese Households

It is clearly stated in the 14 th Five-Year Plan that China should strengthen financial supervision and law enforcement,build a sound risk management system and mechanism to guard against possible systemic financial risks.However,in recent years,with the rapid development of China’s economy,the leverage ratio of China’s household sector is also on the rise,soaring from 17.9 percent in 2008 to 62.2 percent in 2021,which leads to the increasing financial risks of most households and may even evolve into financial risks of the overall economy.Therefore,it is very urgent and necessary to carry out research on household financial vulnerability in China.With the development and advancement of Internet technology,digital inclusive finance has broken through the restrictions of traditional financial services.It can ignore the restrictions of geographical factors and provide residents of all classes with diversified services such as investment banking,consumer credit,insurance,economic information and other diversified services conveniently and efficiently at a low cost.The development of digital financial inclusion can enhance the availability of financial services,thereby strengthening households’ ability to cope with financial risks.So the study of the relationship between digital financial inclusion and family financial fragility has important research significance to alleviate the financial risk of the family sector in China.First of all,this paper introduces family financial fragility,digital inclusive finance as well as the correlation study between the two in literature review section,and based on the financial exclusion theory,transaction cost theory,portfolio selection theory and life cycle theory,explores the mechanism of direct and indirect effects of financial inclusion on household financial vulnerability.Subsequently,this paper adopts the 2018 provincial data of "Peking University Digital Financial Inclusion Index" jointly released by Peking University and Ant Group and the 2019 data of "China Household Financial Survey" published by Southwestern University of Finance and Economics to study the impact of digital inclusive finance on household financial fragility by using the order-probit model.Two-stage least squares regression(2SLS)and conditional mixed process(CMP)estimation are used to solve the endogeneity problem,and the robustness test is performed using the lag period data,the first-level sub-index of digital inclusive finance and the component indicators of household financial vulnerability.Then,this paper uses the mediating effect model to test the direct and indirect influence mechanism which proposed in the third chapter,and finally carries out the heterogeneity test of income level and urban&rural household registration.The empirical results show that:(1)the development of digital inclusive finance can effectively alleviate the problem of household financial vulnerability,and the empirical results successfully pass the endogeneity test and robustness test.(2)Mechanism research results show that the development of digital inclusive finance can alleviate household financial fragility by improving financial literacy,increasing household income from financial assets and increasing commercial premium expenditure.(3)According to the heterogeneity research results,the development of digital inclusive finance has a more obvious impact on lowincome groups and rural groups,which are key service objects of inclusive finance.Finally,based on the conclusions of empirical research,this paper proposes measures to alleviate household financial vulnerability,such as strengthening the development of digital inclusive finance,improving the digital financial products and the channels of services,and comprehensively improving financial literacy.Overall,this paper analyzes the path mechanism of the impact of digital financial inclusion on household financial vulnerability,and empirically proves it.At the same time,this paper measures family financial fragility by three main definitions of family financial fragility,so that the obtained indicators can more fully reflect the meaning of household financial vulnerability of China.In conclusion,the research of this paper is a useful supplement to the theoretical research on household financial vulnerability and digital financial inclusion.