Inclusive Financial Development and Rural Residents’ Income

What is it about?

In recent years, China has implemented national wide policy to promote the inclusive financial (IF) services. Such promotion policy is a key measure to help the rural people to alleviate poverty and increase income. Further, the policy provides strong support for the implementation of the rural revitalization strategy. First, this study applies a fixed effect model to test whether the development of inclusive finance can increase the rural residents’ income, by analyzing the panel data of 31 provinces from 2011 to 2018. Second, this study further investigates whether “Inclusive Finance Development Plan (2016-2020) ” and the subsequent measures can strengthen the role of inclusive fi nance in promoting rural residents’ income. Last, this study investigates whether economic development can alter the relationship between the development of inclusive finance and the income of rural residents. Evidence suggests that the national promoting policy has significantly strengthened the impact of inclusive finance on improving rural area income. Also the development of inclusive finance has a stronger impact on rural residents’s income in the lower economic development areas than that in the higher economic development areas. Further robustness check on the conclusion is conducted via quantile regression.

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Why is it important?

Evidence suggests that the national promoting policy (inclusive financial services) has significantly strengthened the impact of inclusive finance on improving rural area income. Also the development of inclusive finance has a stronger impact on rural residents’s income in the lower economic development areas than that in the higher economic development areas.