Inclusive Financial Development and Multidimensional Poverty Reduction: An Empirical Assessment from Rural China

Abstract

Inclusive finance is often considered to be a critical element that makes growth inclusive, as access to finance can enable the poor to lift themselves from income poverty. However, can it play such a role when the poor are in multidimensional poverty? Why does financial exclusion and poverty still exist in countries with vigorous development of inclusive finance? We build an evolutionary game model to analyze the equilibrium strategies of inclusive financial institutions and the poor in poverty reduction activities to find the answers. As there is a high incidence of poverty and serious financial exclusion in rural areas of China, we test the poverty reduction effectiveness of inclusive financial development on the poor with different labor capacity in rural China from 2010 to 2016 based on survey data of China Family Panel Studies and relevant statistics collected from 21 provinces. Our study finds there are differences in poverty alleviation effects of inclusive financial development among the poor with different labor capacities; if financial institutions target the service precisely to the working-age population in rural areas, they will achieve the dual goals of maintaining institutional sustainable development and alleviating poverty; And the development of inclusive finance in aspects of permeability, usability, and utility can significantly reduce multidimensional poverty. Therefore, to further improve the multidimensional poverty reduction performance and stimulate the endogenous motivation of the poor, it is necessary to strengthen the support for financial resources served to the working-age population, and to improve the development of rural inclusive finance in aspects of quality and affordability.

Evolutionary Game Analysis of Three Players on Behavioural Strategy of P2P Lending Participants: A Sustainable Operations Perspective

“…Li et al used the two-player EGM to simulate the performance of supply chain members under the environment of financial risk [39]. Yang and Fu constructed an EGM to analyse the equilibrium strategies of inclusive financial institutions and the poor in poverty-reduction activities [40]. Liu and Xia constructed an EGM between borrowers and lenders in P2P lending market to study the impact of evolutionary equilibrium strategies of lenders and borrowers' behavioural strategies on the risk to the P2P lending platforms under bounded rationality [20].…”

“…us, it is necessary to understand the interest and interactions of P2P lending participants to coordinate the interest among them for achieving sustainable development of the P2P lending industry. (3) According to the aforementioned literature, the EGM of two game groups or two players is often applied in studies [20,[36][37][38][39][40]. However, practical cases usually involve more than two participants.…”

Spatial econometric analysis of digital financial inclusion in China

“…In addition, it was found that the urban–rural income gap had a significant, negative impact on the digital financial inclusion index. Using data related to digital financial inclusion and poverty relief from 31 provinces, autonomous regions and municipalities in China from 2011 to 2015, Yang (2019) found that digital support services and inclusive credit services had a positive effect on poverty-alleviation efficiency in rural areas. However, the effect of digital financial inclusion on poverty alleviation was observed to vary significantly between rural and urban areas (Yang, 2019).…”

“…Using data related to digital financial inclusion and poverty relief from 31 provinces, autonomous regions and municipalities in China from 2011 to 2015, Yang (2019) found that digital support services and inclusive credit services had a positive effect on poverty-alleviation efficiency in rural areas. However, the effect of digital financial inclusion on poverty alleviation was observed to vary significantly between rural and urban areas (Yang, 2019). The author found that information infrastructure and the development of the financial service industry were key factors affecting poverty-alleviation efficiency.…”

Research on the Effect of Rural Inclusive Financial Ecological Environment on Rural Household Income in China

“…After eliminating absolute poverty, the problem of relative poverty in China remains severe and will remain for a long time to come. How to consolidate the achievements of poverty eradication and increase the income of rural residents has become an important issue facing the all-round construction of a great modern socialist country [3]. A good rural financial ecological environment can promote the efficient operation of rural finance.…”