Study on the Path and Mechanism of Digital Inclusive Finance on Economic Growth

An Empirical Analysis based on National and Provincial Panel Data

Abstract

Over the past four decades of reform and opening up, China's economy has achieved a high average annual growth rate of over 9 per cent, becoming the second largest economy in the world. At the same time, China's financial reform and development has been continuously optimized, and the financial industry has maintained rapid development. With the accelerated integration of new-generation digital technology and inclusive finance, the flourishing development of inclusive finance has added strong momentum to the financial services economy. Based on the relevant research literature on inclusive finance at home and abroad and the characteristics of digital finance, we constructed the evaluation index system of cross-country digital inclusive finance level and the evaluation index system of provincial digital inclusive finance level, and evaluated the development level of digital inclusive finance in 31 provinces (municipalities directly under the central government) in China. On this basis, the impact of digital financial inclusion on economic growth is comprehensively analyzed from two perspectives (temporal and spatial dimensions) and two levels (cross-country and provincial levels), and the empirical evidence is analyzed from the temporal dimension by using traditional econometric analysis methods. The increase in the level of digital inclusive finance in a region has a significant contribution to the region's economic growth, and the mediating effects of credit constraints, entrepreneurship, investment and urban-rural income gap between digital inclusive finance and economic growth are proposed and verified through the decomposition of the direct-indirect effects and heterogeneity of the spatial Durbin model. Policy recommendations are proposed through relevant research results to help China's further economic development.