The Impact of Digital Inclusive Finance on Rural Revitalization: Evidence From China

Introduction

As socialism with Chinese characteristics enters a new era, the main contradiction in China is now between the people's growing needs for a better life and unequal development. This main contradiction is particularly severe in rural areas of our country. In the 19th National Congress of the Communist Party of China, the Communist Party of China first elevated rural revitalization to a national strategic level. The importance of rural revitalization is to recognize that there is a connection between rural revitalization and poverty alleviation. The coordinated development and mutual promotion of the two are the only way to build a moderately prosperous society in an all-round way. Rural revitalization and comprehensive poverty alleviation both reflect the country’s people-centered development philosophy and uphold the status of farmers as the main body. Since the concept of rural revitalization was proposed, many scholars have conducted research on the meaning, internal logic, construction of index evaluation systems, and implementation paths of rural revitalization (Cen et al., 2022; Zha and Liu, 2023) as well as the factors that can affect the rural revitalization (Luo et al., 2023; Liu et al., 2023b). Financial resources can bring prosperity to the industry, improvement of education, and technology upgrading, therefore, the financial development is essential in rural revitalization. However, referring to the role of financial development in rural revitalization, Xiong (2022b) shows that due to the financial exclusion effect of traditional finance, the development of China's rural areas in the financial field is still in its infancy. As a combination of finance and emerging digital technology, digital inclusive finance can effectively circumvent the financial exclusion effect of traditional finance and improve financial services in terms of availability, convenience, and comprehensiveness. Some scholars have engaged in investigating the impact of digital finance on rural revitalization, such as Zhao et al. (2022) who queried the role of digital inclusive finance on urban-rural income gap, as well as Li et al. (2022) who studied the role of digital finance in high-quality agricultural development. However, there are not many studies on the direct effect of digital inclusive finance on rural revitalization. Additionally, several scholars tried to query the role of digital technology or digital finance in rural development (Luo et al., 2023; Liu et al., 2023b; Xiong et al., 2022a; Zha and Liu, 2023; Han et al., 2024). For instance, Liu et al. (2023a) examined the role of digital entrepreneurial ecosystem in high-quality growth of rural areas. However, most scholars analyze the relationship between digital inclusive finance and rural revitalization by analyzing the economic data of a single or several provinces or analyzing how to do so from a national perspective.¹ In view of this, this article first theoretically analyzes the working mechanism of the relationship between digital inclusive finance and rural revitalization. It then uses the economic data of each province and city to construct a relatively scientific and reasonable indicator to measure the development level of rural revitalization in each region and analyzes the numbers from an empirical perspective, which can do some good to provide reference for the implementation of China's rural revitalization strategy and the development of digital inclusive finance.

The impact of digital finance on rural revitalization can be interpreted as follows. Digital financial inclusion, as a member of financial technology, can solve the problem of information asymmetry between borrowers and lenders to a certain extent, and can inject new energy into small farmers, township enterprises, or cooperatives that lack credit means and credit channels and whose development has stagnated to finally realize the prosperity of rural industries (Zhao et al., 2022). Aside from this, digital finance can change farmers' ideas and guide them to build green and environmentally friendly beautiful villages (Zhou et al., 2022). Digital inclusive finance can stimulate the growth of the green economy, indirectly promote the development of China’s rural areas in a green direction, and ultimately realize rural revitalization (Sun and Zhu, 2022).