Digital Economy, Financial Inclusion and Inclusive Growth

Zhang Xun (张勋)1，2, Wan Guanghua (万广华)3, Zhang Jiajia (张佳佳)1 and He Zongyue (何宗樾)4*
1 School of Statistics, Beijing Normal University, Beijing, China
2 Institute of Digital Finance, Peking University, Beijing
3 Institute of World Economy, Fudan University, Shanghai, China
4 School of Economics and Management, Beijing University of Technology, Beijing

Abstract: This paper represents an early attempt to investigate whether digital finance driven by the internet revolution helps promote inclusive growth in China. We match the Index of Digital Financial Inclusion, which measures digital finance development in China, with data of the China Family Panel Studies (CFPS), which provide representative household survey data in China. Firstly, based on sub-sample empirical analysis, we find that digital finance has helped increase household income, especially rural household income, in China. Thus, digital finance is conducive to inclusive growth in China by narrowing regional and urban-rural gaps. Secondly, we examine how digital finance spurs inclusive growth in China by bringing rural households equal access to entrepreneurship opportunities. Lastly, we uncover how digital finance interacts with physical capital and social capital in promoting entrepreneurship, concluding that households with less physical or social capital had benefited more, which is also conducive to inclusive growth.

Keywords: digital economy, digital finance, financial inclusion, inclusive growth, entrepreneurship
JEL Classification Codes: D14, L20, R58
DOI: 1 0.19602/j .chinaeconomist.2020.05.07

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