Digital Financial Inclusion and Farmers’ Vulnerability to Poverty: Evidence from Rural China

The impact of digital financial inclusion and urbanization on agricultural mechanization: Evidence from counties of China

This paper expounds the theoretical logic among digital inclusive finance, urbanization, and agricultural mechanization level, puts forward the research hypothesis, and then selects the county unbalanced panel data of 1309 counties in China from 2014 to 2020 based on the two-way fixed model with standard error clustering to county level and mediating effect model for empirical data regression analysis. Through baseline regression analysis, mediation effect analysis, and heterogeneity analysis, the findings of this paper are as follows. First, digital financial inclusion has a significant positive effect on the growth of agricultural mechanization. Second, digital inclusive finance at the county level can also indirectly affect the growth of agricultural mechanization through urbanization. That is, agricultural mechanization has an intermediary effect between the financial agglomeration at the county level and the growth of farmers' income. Third, the impact of county-level digital financial inclusion on the growth of agricultural mechanization level is significantly heterogeneous, and the promoting effect is significant in areas with balanced grain production, national-level poor county or contiguous areas of dire poverty, and areas with a good foundation for digital financial inclusion. By analyzing digital inclusive finance, urbanization, and agricultural mechanization, this paper proposes targeted policy recommendations. First, the government can promote agricultural mechanization by developing digital financial inclusion. Second, the government should guide and accelerate the process of digital financial inclusion, promoting urbanization thereby amplifying the positive impact of digital financial inclusion on agricultural mechanization. Third, given the heterogeneity of the impact of digital financial inclusion on agricultural mechanization, local development should focus on developing different dimensions of digital financial inclusion according to specific conditions.

Impacts of financial development on the energy consumption in China from the perspective of poverty alleviation efficiency

Poverty alleviation and energy saving are two major issues of sustainable development targets. Meanwhile, financial development (FD) is a powerful engine of economic growth, which is regard as a valid approach to contain the demand for energy consumption (EC). However, few studies link the three factors and explore the specific impact mechanism of poverty alleviation efficiency (PE) on the tie between FD and EC. Thus, we employ the mediation and threshold models to evaluate the influence of FD on the EC in China during 2010-2019 from the perspective of PE. We affirm that FD indirectly promotes EC through the channel of PE. The mediating effect of PE is responsible for 15.75% of the total effect of FD on the EC. Moreover, FD generates a significant threshold impact on the EC considering the change of PE. When the PE exceeds 0.524, the role of FD in promoting EC is strengthened. Ultimately, the outcome suggests policymakers need to prominent the trade-off between energy saving and poverty reduction during the fast evolution of financial system.

Can government subsidies and public mechanisms alleviate the physical and mental health vulnerability of China's urban and rural residents?

BACKGROUND

Poverty vulnerability has been defined as the likelihood of a family falling into poverty in the upcoming months. Inequality is a major cause of poverty vulnerability in developing countries. There is evidence that establishing effective government subsidies and public service mechanisms significantly reduces health poverty vulnerability. One of the ways to study poverty vulnerability is by using empirical data such as income elasticity of demand to perform the analysis. Income elasticity refers to the extent to which changes in consumers' income affect changes in demand for commodities or public goods. In this work, we assess health poverty vulnerability in rural and urban China. We provide two levels of evidence on the marginal effects of the design and implementation of government subsidies and public mechanisms in reducing health poverty vulnerability, before and after incorporating the income elasticity of demand for health.

METHODS

Multidimensional physical and mental health poverty indexes, according to the Oxford Poverty & Human Development Initiative and the Andersen model, were implemented to measure health poverty vulnerability by using the 2018 China Family Panel Survey database (CFPS) as the data source for empirical analysis. The income elasticity of demand for health care was used as the key mediating variable of impact. Our assessment was conducted by a two-level multidimensional logistic regression using STATA16 software.

RESULTS

The first level regression indicates that the marginal utility of public mechanism (PM) in reducing urban and rural vulnerability as expected poverty on physical and mental health (VEP-PH&MH) was insignificant. On the other hand, government subsidies (GS) policies had a positive suppression effect on VEP-PH&MH to a relatively low degree. The second level regression found that given the diversity of health needs across individual households, i.e., the income elasticity of demand (HE) for health care products, PM and GS policies have a significant effect in reducing VEP-PH&MH in rural and urban areas. Our analysis has verified the significant positive impact of enacting accurate GS and PM policies on effectively reducing VEP-PH&MH in rural as well as urban areas.

CONCLUSIONS

This study shows that implementing government subsidies and public mechanisms has a positive marginal effect on reducing VEP-PH&MH. Meanwhile, there are individual variations in health demands, urban-rural disparities, and regional disparities in the effects of GS and PM on inhibiting VEP-PH&MH. Therefore, special consideration needs to be given to the differences in the degree of health needs of individual residents among urban and rural areas and regions with varying economic development. Furthermore, considerations of this approach in the current worldwide scenario are analyzed.

How Can Digital Financial Inclusion Promote High-Quality Agricultural Development? The Multiple-Mediation Model Research

In order to balance the relationship between economics, society and environment, the Chinese government has stated that China's economy should shift from high-speed growth to high-quality development. Since agriculture is the foundation of the national economy, high-quality development of agriculture plays significant roles in the achievement of food security, social stability and environmental sustainability in China. In practice, the expansion of digital financial inclusion (DFI) seems to provide valuable opportunities for the development of high-quality agriculture. Nevertheless, in theory, the extant literature ignores exploration of the close relationships between DFI and high-quality agricultural development (HQAD). Hence, using Chinese provincial panel data from 2011 to 2020 and structural equation model (SEM) in STATA 16.0, this paper attempts to investigate whether and how DFI can enhance HQAD. Analysis reveals that (1) DFI can directly promote HQAD; (2) DFI can indirectly facilitate HQAD through the mediator of farmland transfer (FLT); (3) DFI can indirectly promote HQAD through the mediator of farmland mechanization level (FML); (4) compared with the benefits brought by "high-mechanization", the benefits brought by "large-scale" farmland transfer policies are much greater. To our knowledge, our research is one of the first to investigate the direct and indirect effecting mechanisms of DFI's influence on HQAD from the perspectives of farmland scale and farmland technology.

Farmers’ personality traits and credit exclusion: Evidence from rural China

Unlike existing research from the perspective of financiers or farmers’ financial literacy, this Manuscript investigates the impact of personality traits on Chinese farmers’ credit exclusion using data from 2018 to 2019 of China Agricultural University’s Rural Inclusive Finance Survey. The empirical findings show that farmers’ personality traits significantly affect their credit exclusion. Specifically, conscientiousness and extroversion alleviate the credit exclusion, while agreeableness significantly intensifies the credit exclusion. In addition, the Blinder–Oaxaca decomposition method is used to analyze the contribution of personality traits to each dimension of credit exclusion, and the results of the study show that personality traits mainly affected farmers’ self-exclusion. Therefore, to develop inclusive finance in China, training and improving farmers’ positive personality traits must be fostered.

Does Digital Inclusive Finance Mitigate the Negative Effect of Climate Variation on Rural Residents’ Income Growth in China?

Global anthropogenic greenhouse gas emissions have exacerbated climate variation. Climate variation impacts the agricultural production and rural residents’ income negatively, further widening the urban-rural income gap and harming the co-benefits. Narrowing the income gap has always been a global concern and an important part of China’s rural revitalization strategy. However, little is known about whether digital inclusive finance can mitigate the negative impact of climate variation on rural residents’ income growth in China. Using panel data from 31 provinces in China from 2011 to 2019 and a digital inclusive finance index developed by Peking University, together with historical temperature data, this study examined the impact of digital inclusive finance on Chinese rural residents’ income growth in response to climate variation. It was found that digital inclusive finance could promote rural resident operating, wage, and transfer income growth. A heterogeneity analysis revealed that rural residents in central and western regions experienced larger digital inclusive finance facilitating effects on income growth than the eastern regions. Further analyses using the Spatial Dubin Model found that digital inclusive finance had a spatial spillover effect as it could significantly promote income growth in neighboring provinces. Although climate variation reduced rural residents’ income and increased their risks, digital inclusive finance significantly mitigated this negative effect. Digital information infrastructure construction, financial risk prevention, digital financial knowledge, and e-commerce popularization were practical paths to optimizing inclusive finance development in rural areas and promoting poverty alleviation and rural revitalization to resist climate risks.

The impact of digital finance use on sustainable agricultural practices adoption among smallholder farmers: an evidence from rural China

Sustainable agricultural practices (SAPs) are conducive to increasing agricultural productivity and income while reducing resource and environmental stress. However, due to credit constraints in traditional financial markets, the adoption rate of SAPs remains low among smallholder farmers in rural China. Recently, the emergence of digital finance provides small farmers with a new way to obtain credit and alleviate their credit constraints, which may exert an impact on the adoption of SAPs. To verify this conjecture, this paper examines the impact and mechanism of digital finance use on SAPs adoption among smallholder farmers in China based on survey data collected from 903 apple growers. Empirical results showed that digital finance use significantly increases the number of SAPs adopted by smallholder farmers. Alleviating credit constraints, promoting information acquisition, and facilitating social interactions are the pathways through which digital finance use influences small farmers' SAPs adoption. Heterogeneity analysis showed that farmers with higher education level, smaller farming size, and who have received extension services adopt more SAPs with the use of digital finance. Therefore, it is suggested that the government should strengthen the construction of rural network infrastructure and provide training to promote smallholder farmers' access to digital financial services in a cost-effective and secure manner.

Digital financial inclusion: A gateway to sustainable development

The covid-19 pandemic revolutionises digital financial services, and hence digital financial inclusion is essential to ensure everyone can access digital financial services and thus promote sustainable economic growth. The development and activities promoting digital financial inclusion must align and help attain 2030 Sustainable Development Goals (SDGs). While the pandemic is anticipated to increase the usage of digital financial services, it has also created challenges for certain countries. Hence, a systematic literature review explores digital financial inclusion across countries. This research finds that developing countries, mainly Asian countries, embrace and improve digital financial inclusion to help reduce poverty. However, the results indicate that in developing countries, a persistent divide exists between gender, the wealthy and the poor, and urban and rural areas regarding access to and usage of digital financial services. At the end of the study, we propose a few recommendations, focusing on improving digital infrastructure, simplifying the complicated banking procedures, and stressing the importance of financial education, enabling the smooth implication of digital financial inclusion across countries.

Has COVID-19 hindered small business activities? The role of Fintech

Investigations into the effects of the pandemic on small businesses remain insufficient, and the role of Fintech during a pandemic has rarely been investigated. Using novel firm-level data on registration and various identifications of fixed-effect and difference-in-difference models, we exploit the interactive effect of lockdown policies and Fintech on the creation of small businesses. First, both lockdown policies and Fintech have negative impacts on new firm creation in the manufacturing sector. Second, lengthier pandemics induce more severe destruction of firm registrations. Third, an alternative indicator shows that Fintech is not intensively related to labor demand in the manufacturing sector. Policy implications call for higher match efficiency between the manufacturing sector and financial resources to reduce financial misallocation to a large extent.

The Impact of Fintech on Economic Growth: Evidence from China

Financial technology (fintech) has seen fast development recently in China; however, studies exploring the contributions of fintech to China’s economic growth remain limited. Thus, this study motivated by the knowledge gaps and fast expansion of fintech examined: (i) the impact of fintech and the submeasures of third-party payment, credit, and insurance on China’s economic growth; (ii) the regional and provincial impact of fintech on China’s economic growth; (iii) the causality relationships between fintech and economic growth. By using a sample of 31 provinces in China and the instrumental variable generalized method of moments (IV–GMM) technique, the study established the following: (i) fintech and the submeasures of third-party payment, credit, and insurance have a statistically significant positive effect on China’s economic growth. Specifically, a 10% rise in fintech, third-party payment, credit, and insurance raises China’s economic growth by 8%, 4%, 5%, and 16%, respectively; (ii) the eastern region has the highest growth effect of fintech. Moreover, Zhejiang province has the highest growth effect of fintech at the provincial level; (iii) a unidirectional causality exists from third-party payment and credit to economic growth, and economic growth to insurance; a bidirectional causality exists between fintech and economic growth. This article explicitly suggests substantial institutional reforms to promote the healthy development of fintech in China.

Financial Exclusion in Rural and Urban Contexts in Poland: A Threat to Achieving SDG Eight?

Financial inclusion, which consists of having a financial system that is easily accessible to citizens, is identified by various international organizations such as the new UN Agenda 2030, as a priority objective. This objective is particularly relevant in rural areas, where access to these services is more difficult, as citizens have to travel several kilometers to access them. In this study, we analyze the current situation of the Polish financial sector in terms of its accessibility, in order to measure the degree of financial inclusion. For this purpose, we use three combined methodologies. Initially, a data extraction from the Central Bank of Poland was carried out. Subsequently, three methodologies are applied to calculate financial inclusion. First, we apply the criteria of the Financial Access Survey (FAS) of the International Monetary Fund. Secondly, the Access to Cash Index (ACI) methodology by calculating a score that describes the access to banking services according to certain items. Finally, we applied the nearest neighbor methodology to detect in each voivodship those points where it is most difficult (measured in km distance) to access banking services. Some areas, especially in rural areas of the different voivodeships, present certain problems when it comes to accessing banking services. Therefore, the fulfillment of SDG 8.10 will be more difficult to achieve in these areas. The public authorities must pay attention to this, in order to reach the commitments acquired with the 2030 agenda, in terms of financial inclusion.

Has digital finance widened the income gap?

Using the statistical data of 280 prefectural-level cities in China from 2011 to 2020, this paper empirically tests the relationship between digital finance and residents' income in a linear and nonlinear model based on the G-J model theory, respectively. The study aims to discuss and analyze the impact of digital finance development on income distribution in the context of the current situation of digital finance development in China and further explore how to make digital finance better regulate the income distribution of residents. The innovation of this paper is to use two nonlinear methods to verify the Kuznets effect and threshold characteristics of digital financial development affecting the income distribution of residents based on linear analysis and explore the relationship between n digital economic development the current income gap more comprehensively. The study shows a Kuznets effect of digital finance development on the income distribution of Chinese residents. Thus, most regions in China have not yet crossed the inflection point of the bell-shaped curve, and the income gap within areas will continue to increase with the development of digital finance. By constructing a threshold model, it is found that the positive effect of digital finance on income disparity may initially increase with the increase of regional economic level. Still, when the regional economic development reaches a higher stage, the effect will tend to fall back. As a result, the negative impact of digital finance development on residents' income distribution will be significantly reduced at that time.

Assessing the Role of Digital Finance on Shadow Economy and Financial Instability: An Empirical Analysis of Selected South Asian Countries

The advancement in fintech technological development in emerging countries has accelerated the role of digital finance in economic development. Digital finance assists in financial inclusion; however, it may also increase the chances of financial instability due to systematic risks. Emerging countries are also in the clutches of shadow economic growth, which reduces taxable income revenue and creates pressure on financial inclusion prospects. The current study attempts to measure the impact of digital finance on the shadow economic growth and financial stability among the selected South Asian emerging countries. We have used the CUP-FM and CUP-BC estimation methods to measure the above relationship on two model frameworks from 2004 to 2018, with the former measuring the influence of digital finance on the shadow economy and the latter examining the relationship between digital finance and financial stability. In addition, the second-generation unit root test, and the Westerlund cointegration analysis are also employed to confirm the stationarity and cointegration among the variables. The result of the Westerlund’s cointegration confirms a long cointegration between the explanatory and outcome variables. Furthermore, the long-run estimation results conclude that an increase in digital finance helps in reducing the growth of the shadow economy among the selected sample countries. However, it also increases the likelihood of systematic risks and increases financial instability. The study also reveals that the control variables like unemployment and industrial productivity also have a significant influence on financial stability and the shadow economy. The findings will assist readers in comprehending how digital finance influences the shadow economy and promotes financial inclusion and stability in emerging nations.

The Protective Effect of Digital Financial Inclusion on Agricultural Supply Chain during the COVID-19 Pandemic: Evidence from China

Financial inclusion plays a positive role in protecting agriculture during or after disaster. This paper focuses on the protective effect of digital financial inclusion on the agricultural supply chain and analyzes three mechanisms of the protective effect: financial widening, financial deepening, and financial services digitization. Based on the Gravity Equation, we conduct an empirical study using agricultural logistics and digital financial inclusion data from China. The regression results indicate that a 1% increase in the digital financial inclusion, measured by the Peking University Digital Inclusion Index, increases agricultural trade during the COVID-19 pandemic by approximately 1.6%. Furthermore, heterogeneous protective effects exist between regions in China. Digital financial inclusion is more effective in the Eastern regions in protecting the ASC than in other regions. This paper enriches the understanding of financial inclusion in helping agriculture supply chain recovery.

Artificial Intelligence in the Industry 4.0, and Its Impact on Poverty, Innovation, Infrastructure Development, and the Sustainable Development Goals: Lessons from Emerging Economies?

Artificial intelligence in the fourth industrial revolution is beginning to live up to its promises of delivering real value necessitated by the availability of relevant data, computational ability, and algorithms. Therefore, this study sought to investigate the influence of artificial intelligence on the attainment of Sustainable Development Goals with a direct focus on poverty reduction, goal one, industry, innovation, and infrastructure development goal 9, in emerging economies. Using content analysis, the result pointed to the fact that artificial intelligence has a strong influence on the attainment of Sustainable Development Goals particularly on poverty reduction, improvement of the certainty and reliability of infrastructure like transport making economic growth and development possible in emerging economies. The results revealed that Artificial intelligence is making poverty reduction possible through improving the collection of poverty-related data through poverty maps, revolutionizing agriculture education and the finance sector through financial inclusion. The study also discovered that AI is also assisting a lot in education, and the financial sector allowing the previously excluded individuals to be able to participate in the mainstream economy. Therefore, it is important that governments in emerging economies need to invest more in the use of AI and increase the research related to it so that the Sustainable Development Goals (SDGs) related to innovation, infrastructure development, poverty reduction are attained.

The Impact of Fintech on Poverty Reduction: Evidence from China

Ending poverty in all its forms by 2030 remains the first agenda of Sustainable Development Goals set by the United Nations in 2015. Motivated by this agenda, this study examined the direct and indirect effect of financial technology (fintech) and its sub-measures of third-party payment and credit on poverty measured by household per capita consumption. We used a panel of 31 provinces in China from 2011 to 2017. The results indicated that fintech and these sub-measures reduce poverty in China. The results further showed that fintech complements economic growth and financial development to reduce poverty in China.

Detection of Financial Inclusion Vulnerable Rural Areas through an Access to Cash Index: Solutions Based on the Pharmacy Network and a CBDC. Evidence Based on Ávila (Spain)

The ability to access quality financial services and cash has been indicated by various organizations, such as the World Bank or UN, as a fundamental aspect to guarantee regional sustainable development. However, access to cash is not always guaranteed, especially in rural regions. The present study is based in the Ávila region of Spain. A parameter called the “access to cash index” is constructed here. It is used to detect rural areas where the ability to access cash and banking services is more difficult. Based on the “access to cash index”, two sustainable solutions are proposed: The first (in the short term), based on extending access to cash, takes advantage of the existing pharmacy network. With this measure, a notable reduction of more than 55% of the average distance required to access this service is verified here. The second is based on the implementation of a central bank digital currency. Here, the results show an acceptance of 75%. However, it is known that elderly people and those without relevant education and/or low incomes would reject its widespread use. Such a circumstance would require the development of training and information policies on the safety and effectiveness of this type of currency.

Industry 4.0 in Finance: The Impact of Artificial Intelligence (AI) on Digital Financial Inclusion

This study sought to investigate the impact of AI on digital financial inclusion. Digital financial inclusion is becoming central in the debate on how to ensure that people who are at the lower levels of the pyramid become financially active. Fintech companies are using AI and its various applications to ensure that the goal of digital financial inclusion is realized that is to ensure that low-income earners, the poor, women, youths, small businesses participate in the mainstream financial market. This study used conceptual and documentary analysis of peer-reviewed journals, reports and other authoritative documents on AI and digital financial inclusion to assess the impact of AI on digital financial inclusion. The present study discovered that AI has a strong influence on digital financial inclusion in areas related to risk detection, measurement and management, addressing the problem of information asymmetry, availing customer support and helpdesk through chatbots and fraud detection and cybersecurity. Therefore, it is recommended that financial institutions and non-financial institutions and governments across the world adopt and scale up the use of AI tools and applications as they present benefits in the quest to ensure that the vulnerable groups of people who are not financially active do participate in the formal financial market with minimum challenges and maximum benefits.