Abstract
Based on the survey data of 43 rural commercial banks in Jiangsu Province, China, from 2015 to 2018, 14 indicators among 3 dimensions—coverage, business implementation and service quality—were selected to establish the inclusive finance index of rural commercial banks. The impact of market competition and government intervention on the development of the inclusive finance of rural commercial banks and the mechanism were empirically tested. The heterogeneous performance of market competition and government intervention in different market conditions were also thoroughly discussed. The results show that both market competition and government intervention can help reduce the pricing level and broaden the service coverage of rural commercial banks, which can promote the development of inclusive finance. But the role of market competition has a stronger impact than that of government intervention. The heterogeneity test shows that market competition plays a more significant role in the regions with higher levels of market competition and financial development, and in the southern and central Jiangsu Province, where the economy is relatively more developed. However, in the regions with lower levels of market competition and financial development, as well as in the northern Jiangsu Province, with a relatively backward economy, government intervention significantly improves the degree of inclusive finance of rural commercial banks. Finally, we advocate that the roles of market and government should be applied according to local conditions, and the development of the inclusive finance in rural commercial banks needs to be continuously promoted.
Highlights
Publisher’s Note: MDPI stays neutralFinancial inclusion refers to the provision of appropriate and effective financial services to all social classes and groups in need of financial services at an affordable cost based on equal opportunity requirements and the principle of business sustainability
The results show that when the level of market competition increases by 1%, the inclusive finance index of rural commercial banks (RCBs) will increase by 0.2323% at a 5% level of significance
The results of column (2) in Table 6 show that when the level of financial development in a county is relatively high, both market competition and government intervention simultaneously promote the development of the inclusive finance of RCBs and the market has played a more important role
Summary
Financial inclusion refers to the provision of appropriate and effective financial services to all social classes and groups in need of financial services at an affordable cost based on equal opportunity requirements and the principle of business sustainability. The research by Yang et al [14] revealed that the government’s commitment to the establishment of a credit system, the improvement of risk aversion mechanisms and implementation of supporting policies for financial institutions will benefit the development of inclusive finance in rural areas. We aim to clarify how market competition and government intervention work together on the development of inclusive finance in rural financial institutions, and provide policy recommendations on making good use of the roles of the market and the government in accordance with local conditions, continuously promoting the development of inclusive finance in rural areas and supporting the implementation of a rural revitalization strategy
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
