The Impact Mechanism Of Digital Inclusive Finance On Urban-rural Income Gap

In recent years,China’s economic and social development has made great progress and the people’s living standards have improved significantly,but the effects of development are still uneven due to various factors.The focus of China’s modernization has gradually shifted to common prosperity.In China,the urban-rural dichotomy is a long-standing economic characteristic that has led to uneven regional development and uneven income distribution.Narrowing the urban-rural income gap is one of the essentials of common prosperity,and reducing the urban-rural income gap to a certain range can help achieve shared development and fair income distribution.With the rapid development of science and technology,such as big data,cloud computing,and other frontier sciences,the coverage of digital inclusive finance is getting wider and wider,which has an important impact on today’s social economy and people’s daily life.The development of digital inclusive finance provides convenient and reliable financial services to targets like SMEs and low-income groups that are neglected by traditional finance.The policy background of the development of digital inclusive finance is first introduced,followed by an analysis of the current development status of digital inclusive finance and urban-rural income gap based on factual data,and then how digital inclusive finance can improve the urban-rural income gap,and also how it can promote social income balance through different channels will be illustrated.The empirical test section uses panel data of 203 cities in China from 2011-2019 to explore the effects of the total digital inclusive finance index and sub-indices of each aspect on the urban-rural income gap in different regions of China using benchmark regressions,and the results are tested for robustness.In terms of mechanism analysis,the role of three channels,namely,economic growth,non-farm employment and agricultural production scale,in the impact of digital inclusive finance on the urban-rural income gap is analyzed.The results of the study are as follows:(1)the income gap between urban and rural areas can be effectively reduced through the implementation of digital inclusive finance;(2)in terms of different aspects,the breadth of coverage,depth of use and digitization of digital inclusive finance can effectively reduce the income gap between urban and rural areas;and the effects of breadth of coverage and depth of use are more prominent;(3)in terms of regional heterogeneity,the Digital inclusive finance can play a role in narrowing the urban-rural income gap in all three regions of China’s East,West and Central Asia,but it is more significant in Central and West China;(4)In terms of the role path: digital inclusive finance significantly reduces the urban-rural income gap by boosting economic growth,increasing non-farm employment and expanding the scale of agricultural production.Finally,the following policy suggestions are put forward: improving the top-level design of digital inclusive finance policies,broadening the degree of digitization,developing digital inclusive finance with regional characteristics,and promoting farmers’ employment and entrepreneurship,which provide new ideas for promoting the long-term development of digital inclusive finance and narrowing the urban-rural income gap.