Abstract
While digital technologies transform financial servicesglobally, research examining their impact on public resource distribution remains limited, especially regarding regional variations in effectiveness. Prior studies have separately addressed digital finance adoption or public service delivery, neglecting their interconnected role in development. Analyzing Chinese provincial data (2011–2021) through fixed effects and instrumental variable approaches, we find that digital financial inclusion significantly enhances public service equity, particularly in regions with advanced innovation capabilities and established technological infrastructure. Our analysis reveals two key mechanisms: reduced metropolitan-rural disparities and industrial structure optimization, with effects most pronounced in eastern provinces and high-innovation regions. The findings show that both service accessibility and usage intensity contribute to balanced resource allocation, though effectiveness varies substantially with regional innovation capacity. These results indicate that technological advancement in financial services can promote regional equity when aligned with local innovation capabilities, providing strategic insights for policymakers developing targeted digital finance initiatives across diverse development contexts.
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