Abstract
Financial services are an essential source of capital and play a crucial and significant role in urban–rural integration. We analyse empirically the effect of digital finance on urban–rural integration and its mechanism using provincial panel data in China for 2011–2020. The results indicate that digital finance contributes to urban–rural integration. Moreover, for every 1 standard deviation increase in digital finance development, the degree of urban–rural integration increases by 7.7% on average, and it is more evident in China’s eastern regions, with regional heterogeneity. The level of entrepreneurship can be a vital channel for digital finance to facilitate urban–rural integration. The mechanism of action of digital finance to facilitate urban–rural integration by improving entrepreneurship levels is primarily revealed in the group with lower levels of human capital, which exhibits certain inclusive characteristics. This study is conducive to developing a policy for promoting the free flow of resources between urban and rural areas and advancing urban–rural integration.
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