The Role of Inclusive Finance in China’s Economic Growth: Empirical Evidence from Quantile Regression on Panel Data

Abstract

Inclusive finance is one of the key topics of recent research. Researchers found that in the process of economic development, inclusive finance serves a crucial function. However, there is still no unified explanation for the role of inclusive finance’s disaggregated indexes (coverage breadth, usage depth and level of digitalization) in economic development. Therefore, by collecting panel data from 31 provinces and analyzing through quantile regression approach, this paper studies the relationship between the Peking University Digital Financial Inclusion Index of China (PKU-DFIIC) and each province’s economic development, and further investigates whether the disparity in regional economic development may be closed by the advancement of inclusive digital finance. It is discovered that the coverage breadth, usage depth and digitization level can promote economic growth. The largest contribution to closing the regional economic development gap can be made via coverage breadth, while the usage depth plays the greatest role in promoting economic expansion. The eastern area has less economic expansion than the regions of the center and west as a result of the advancement of inclusive digital finance, which may help to close the economic development disparity in the regions. Finally, this paper proposes that people should encourage the creation of equitable digital inclusive financing policies, following the strategy of expanding coverage first, then improving the usage depth in the regions of the center and west, and to balance the advancement of inclusive digital finance among regions, different actions should be taken in different areas with varied levels of economic growth.