Inclusive development of digital finance, family entrepreneurship and poverty reduction effect

Abstract

The inclusive development of digital finance has garnered significant public interest recently due to its potential to alleviate relative poverty and stimulate rural revitalization. Based on China Household Finance Survey (CHFS) data in 2015, 2017, 2019, and 2021, this research empirically tests this hypothesis through linear probabilistic modeling. The results highlight that digital financial inclusion significantly reduces both the levels of relative income and asset poverty in China with the effect more pronounced on the former. Findings also confirm the mediating role of family entrepreneurship on the digital financial inclusion and relative poverty nexus. Further investigation reveals a heterogeneous impact across regions, levels of education, and elite groups, whereby the effect tends to be stronger on rural families, non-party member families, those with a low level of education, and in central and west inland regions. This paper therefore advocates that digital finance could serve as a potential strategy to facilitate poverty reduction in China.