E-commerce participation, digital finance and farmers' income

Abstract

PurposeIt is imperative to achieve sustainable growth in farmers' earnings to sustain poverty alleviation efforts and achieve rural revitalization goals. The authors investigated the nature of the non-linear relationship between farmers' e-commerce participation and income growth, analyzed the rationale behind this correlation and examined the moderating effect of digital finance on this relationship.Design/methodology/approachThe authors conducted an empirical investigation using rural household data from the China Household Finance Survey and the regional digital finance index compiled by Peking University. The authors employed a fixed-effect model and a moderating effect model to identify the non-linear influences of e-commerce participation on farmers' income and to analyze the positive synergies of digital finance. The authors used identification and estimation techniques to mitigate the endogeneity problem, specifically employing heteroscedasticity-based instruments.FindingsThere is an inverted U-shaped relationship between e-commerce participation and farmers' income. Digital finance reduces the declining trend in the marginal effects of e-commerce and increases marginal values. Furthermore, the synergistic effect can promote the quality and efficiency of business activities by easing credit constraints, reducing risk aversion and stimulating innovative activities, which in turn can lead to sustained revenue growth.Originality/valueFew studies have focused on the non-linear relationship between e-commerce and farmers' income. This implies that achieving sustained income growth using e-commerce alone is difficult. The synergy between e-commerce and digital finance is a feasible path for achieving this goal.