Impact of Digital Financial Inclusion on Residents’ Income and Income Structure

Abstract

Digital financial inclusion (DFI) plays an increasingly important role in raising residents’ income levels and optimizing income structures. Using data from the 2015–2019 China Household Finance Survey (CHFS), this paper examines the impact of DFI on residents’ income and income structure from a microeconomic perspective using OLS fixed effects models and panel Tobit models. It was found that (1) DFI significantly raises residents’ income, increasing their total annual per capita household income by CNY4200, and increasing their annual per capita household wage income, business income and property income by CNY2430, CNY1030, and CNY450, respectively. In terms of different functions of DFI, the use of digital payment, digital lending and digital financing can raise the annual per capita household income of residents by CNY4250, CNY10,360 and CNY3050, respectively. (2) DFI increases wage income by enhancing residents’ household employment level, increases business income by promoting residents’ entrepreneurship, and increases property income by improving the financial market participation. (3) DFI has a more significant effect on increasing income for higher income groups as well as rural residents. The findings of this paper provide theoretical and practical support for optimizing the design of financial inclusion policies and exploring new drivers of income growth for residents.