Study On The Impact Of Digital Inclusive Finance On Consumption Inequality Of Rural Residents

The interests of rural residents are a matter of national importance,and the development and growth of the rural economy and the stimulation of domestic demand in rural areas are hot topics of concern and core tasks in the three dimensional rural issues.Since the reform and opening up,China’s economy has developed rapidly,but the problem of unbalanced economic development is still prominent,and the imbalance is not only reflected in the regions and between urban and rural areas,but also within them.According to the China Family Panel Studies,the Gini coefficient of consumption of rural residents in China has remained high above the warning line of 0.4 in recent years,and the problem of inequality within rural areas is obvious and tends to expand.Traditional finance is facing unsustainable problems in rural society,and is weak in supporting the development of the rural economy and raising the consumption of low-consumption groups in rural areas.By taking advantage of the high efficiency of online and information technology to provide financial services to low-income and low-consumption groups and disadvantaged groups,digital inclusive finance effectively eases their liquidity constraints,reduces precautionary savings,releases the vitality of rural consumption,exert an inclusive effect,effectively promotes equality of opportunity,profoundly affects the economic and social development of rural areas,and improves the overall welfare of society.Based on this,through the review of previous literature,the analysis of classical theories and the logical deduction of the mechanism of action at the theoretical level,this paper discusses how digital inclusive finance affects the consumption inequality of rural residents from the effects of financial environment optimisation,consumption environment improvement,income inequality alleviation,digital divide constraint and lifestyle habit restriction,and puts forward the theoretical hypothesis of this paper in this regard.In the empirical analysis section,this paper explores the overall trends of digital inclusive finance development,consumption of rural residents,and consumption inequality,based on unbalanced panel data from the the Peking University Digital Financial Inclusion Index of China(PKU-DFIIC)matched with the China Family Panel Studies(CFPS)for 2012,2014,2016,and 2018,using a combination of panel Tobit regression,IVTobit regression,placebo test,categorical regression,quantile regression to analyze the impact effect,mechanism of action,and disparate impact of digital inclusive finance development on the consumption inequality of rural residents.The research results show that:(1)Digital inclusive finance in China has achieved rapid development in recent years,and the development of the rural digital inclusive finance system has been gradually improved,but there are constraints such as backward digital technology and uneven levels of financial literacy,etc.Measurements based on CFPS data show that the consumption inequality of rural residents in China was high in2012,2014,2016 and 2018,and there is a trend of deterioration,with a relatively high average value of inequality index in the central region and a large gap in the development and enjoyment consumption.(2)In the long run,there may be an inverted "U" shaped relationship between digital inclusive finance and the Gini coefficient of rural residents’ consumption,but at the current stage,the development of digital inclusive finance has significantly alleviated the problem of consumption inequality of rural residents;(3)Using depth,as an indicator of effective demand,can better reflect the low consumption group in rural areas and alleviate the consumption inequality of rural residents,while the breadth of coverage indicator,which represents rough development,can also alleviate the consumption inequality of rural residents when it grows to a higher level;(4)Providing digital credit and digital insurance services to lower the threshold of financial services,providing online payment channels to improve payment convenience,and expanding investment income channels and employment income channels to alleviate income inequality,these three are important mechanisms for digital inclusive finance to alleviate consumption inequality of rural residents.(5)The development of digital inclusive finance caters to the needs of rural residents to raise the level of demand,effectively alleviating the development and the enjoyment consumption inequality of rural residents;(6)The further analysis show that the digital divide and the education divide prevent digital inclusive finance from paying dividends in areas with low Internet penetration rates and low education levels,the regional development gap makes digital inclusive finance work more in the east and central regions,and the marginal effect of digital inclusive finance on inequality indices of low and medium levels is more significant.Finally,the paper proposes five recommendations: First,to grasp the special characteristics of rural digital inclusive finance development and make use of rural areas’ own advantages to develop digital inclusive finance.Second,grasp the special characteristics of rural low-income consumers,meet the needs of low-income people for low-threshold financial products,and expand the channels of enjoyment-based consumption for rural development.Third,we should pay due attention to the digital divide and increase investment in infrastructure in remote rural areas and use price discrimination to provide rural residents with good value and inexpensive internet facilities.Fourth,due attention should be paid to the issue of the education divide,increasing rural residents’ awareness and acceptance of digital finance and improving the protection of consumer rights.Fifth,the issue of digital inclusive finance regulation should not be overlooked,and the formulation of relevant laws,regulations and standards and norms in the field of digital finance should be promoted.