Comparative Analysis between Digital Finance and Consumption Capacity of Urban and Rural Residents

Abstract

This study empirically investigates the influence of digital finance on the consumption of urban and rural inhabitants using the instrumental variable approach and propensity score matching method based on survey data of Chinese household finance in 2017. The search finds that digital finance has a significant promoting effect on the consumption of Rural and urban dwellers. Digital finance will increase the average household consumption by 24.50%, it will lead to consumption growth by improving the non-agricultural employment level of households and the availability of finance. Further analysis shows that digital finance plays a more obvious role in promoting household consumption of urban and rural residents who are middle and low-income and who participate in Internet financing and online lending, moreover, the consumption growth effect of digital finance was higher than that of traditional credit card use in the same period. The paper's research conclusion is that providing important policy enlightenment for China to expand the coverage of digital finance in rural areas in the new era to drive the consumption development of urban and rural residents.