How Does Digital Finance Promote Household Consumption: An Analysis Based on Micro Survey Data

Abstract

The inexorable rise of digital finance has lead to huge changes in consumption patterns. Under this background, we match the index of Digital Financial Inclusion with data of the China Family Panel Studies (CFPS) to explore the relationship between digital finance and household consumption. Firstly, based on sub-sample empirical analysis, we find that digital finance has helped increase urban household consumption, especially the basic consumption related to life, in China. Secondly, we discuss the mechanism of digital finance to promote household consumption, concluding that the payment convenience of digital finance has accelerated household consumption decisions, thereby promoting consumption growth. Moreover, digital finance can also promote household consumption by reducing the uncertainty faced by family.