Digital Financial Inclusion Facilitates Common Prosperity:From the Perspective of Liquidity Constraint
This paper uses the unique data provided by Internet banks to try to investigate three problems from the per-spective of common prosperity:first,whether digital financial inclusion can help narrow the income gap,furthering com-mon prosperity;second,through what mechanisms digital financial inclusion plays a role,generates social value,and fa-cilitates common prosperity;third,what kind of digital financial inclusion is more propitious for bolstering the social value.We first prepare intuitive evidence for the effects of digital credit enabled by Internet banks by illustrating their promulgation of digital financial inclusion among counties.Next,we use a theoretical model to factor in Internet banks'characteristics to analyze the loosening of liquidity constraints,which underlies the income discrepancy mitigation.An event study framework subsequently examines the income gap narrowing effects of digital financial inclusion,which draws upon Internet banks'county-level cooperation data and employs the initial loan timing,using frequency and inter-est indices to investigate the mechanisms,i.e.,the liquidity constraints loosening.We finally discuss the influence of digi-tal financial inclusion on"common wealth"and"sharing",the relation between digital and traditional financial inclusion,and the facilitation of common prosperity by production-and consumption-related credit.These help deepen understand-ing of what kind of credit is most likely to boost social values.The empirical results are as follows.(1)Digital financial inclusion fosters common prosperity,and cooperation with Internet banks reduces the urban-rural income gap within a county and the regional gap between counties alike.(2)This income gap narrowing effect exhibits heterogeneity with respect to the intensity and duration of credit taking and regional economic development.Digital financial inclusion can alleviate both urban-rural and regional income gaps for counties with more intensive and longer cooperation with Internet banks.For more economically developed counties,only the re-gional gap is narrowed,while the urban-rural gap is more effectively decreased among less developed counties.(3)The digital financial inclusion-induced liquidity constraint loosening is the main mechanism,and the accessibility and conve-nience of credit and the abatement of financing costs have all played a role.(4)Developing credit-dominated digital finan-cial inclusion can boost social welfare,facilitating"common wealth"and"sharing",improving residents'income,releas-ing digital dividends,and complementing traditional financial inclusion,whereas consumption credit has less remit in these aspects.This paper has three marginal contributions.First,the uniqueness of our data ameliorates the precision of the empiri-cal estimates.Specifically,the reverse causality between digital financial inclusion and economic growth as well as resi-dents'income has been dealt by instrumental variables in prior literature,like"the spherical distance between Hangzhou and other cities"(Zhang et al.,2020;Wu et al.,2021),"Internet penetration rate"(Tang,2020),and"Broadband China"(Zhao et al.,2020;Guo et al.,2023).On top of that,we exploit the credit provided by the cooperation between Internet banks and counties-the most direct reflection of the application of digital technology in finance-to employ the event study,which measures the income disparity alleviating effects with higher precision and better considers the correlation between digital technology and finance.Second,the indicator we used in unraveling the mechanism,i.e.,the liquidity con-straint loosening,is on a more micro level.By comparison,existing research often uses digital financial inclusion's subin-dex,like coverage breadth or corporate financial expenses drawn from micro dataset to measure liquidity constraint(Tang et al.,2020;Zhang et al.,2020;Wu et al.,2021;Li et al.,2023).We use the initial credit and using frequency data prof-fered by Internet banks and interest-weighted indices,which better evaluate the liquidity constraint mechanism.Third,our paper is the very first to quantitatively analyze which kind of digital financial inclusion credit can augment social values,providing further references for future practice.Existing literature on the welfare effects of digital financial inclusion con-centrates on financial inclusion,household financial assets,and employment(Huang and Qiu,2021;Shen and Wang,2021;Wu et al.,2021;Yu et al.,2022).This paper reveals which kind of digital financial inclusion is more beneficial for social welfare augmentation by discussing the impact of digital financial inclusion on"common wealth"and"sharing"from the perspective of the relation between digital and traditional financial inclusion,and the heterogeneity regarding common prosperity facilitating effects between production and consumption credit.
Digital Financial InclusionCommon ProsperityLiquidity Constraint
万方数据
维普
