Summary:
The problem of imbalanced and inadequate development in the financial sector is prominently reflected in the allocation of financial resources. Financial development in rural areas is relatively backward and the financing needs of disadvantaged groups such as poor households have not been effectively met. Digital financial inclusion is an important carrier for the development of inclusive finance, as it can effectively expand the coverage of inclusive finance and improve the efficiency of financial resource allocation. However, the development of digital financial inclusion is constrained by factors such as the digital divide. Due to the uneven distribution of digital technologies and existing developmental obstacles, vulnerable groups are likely to encounter new financial exclusions such as “tool exclusion” and “evaluation exclusion” due to their lack of Internet tools and financial literacy. Is there a Matthew effect in digital inclusive financial development？ If so, will income inequality between poor and non-poor households expand as a result？ Using the seeming unrelated regression method (SUR) with the digital inclusive financial index compiled by the Peking University Digital Finance Center, matched with data from China's Labor Force Dynamic Survey (CLDS), we look at poor and non-poor households. We demonstrate the existence of the Matthew effect in digital financial development and study potential mechanisms. We provide a new perspective on digital financial inclusion and give advice for overcoming the imbalances in financial development through the formulation of policies to reduce the income gap in the post-poverty alleviation era. We find that digital finance stimulates livelihood consumption smoothing and the development factor accumulation of poor households, albeit insignificantly. Digital finance significantly facilitates the risk prevention, consumption smoothing, factor accumulation and even entertainment of non-poor households, which proves the existence of the Matthew effect. The Matthew effect differs between digital finance products; the Matthew effect for digital credit collection is greater than that for digital credit and digital payment. The impacts of digital finance on different income disparity types are heterogeneous over the course of digital finance's development, especially for the operating income disparity. This paper makes several contributions. First, in the context of winning the battle against poverty, we systematically study for the first time whether the Matthew effect exists in the process of digital financial development and explore the mechanisms of the differences in the impact of digital finance on poor and non-poor households, enriching the literature on digital finance and clarifying the causes of the current imbalances in digital financial services for the rich and poor. Second, we explore whether there are differentiated Matthew effects for different digital financial products for poor and non-poor households and investigate the heterogeneous impacts of digital finance on different types of income gaps at a micro level. Third, we supplement the literature on digital finance and the Matthew effect, enriching theories of digital finance development and providing theoretical and empirical support for the establishment of a fair and effective income distribution system. Based on our empirical conclusions, we should focus on the following three goals to reduce the Matthew effect of digital financial development. First, for poor households who do not have the ability to escape poverty, the government should strengthen the poverty alleviation effort by offering education and improving the households' financial literacy by multiple methods to overcome the self-exclusion brought by digital technology. Second, we should encourage digital financial platforms and traditional financial institutions to innovate, to strengthen online channels, to continuously improve digital financial functions and to fully tap the functions of digital financial usage and digital support services such as digital insurance and digital investment to improve the utility and affordability of digital finance for poor households. Third, we should increase investments in the communication infrastructure of poor villages and towns, implement the “Internet Equipment to the Countryside” plan, popularize digital terminals and use 5G technology to extend the radius of financial services to overcome the tool exclusion of poor households so that poor households in remote areas can enjoy high-quality financial services.
王修华, 赵亚雄. 数字金融发展是否存在马太效应？——贫困户与非贫困户的经验比较[J]. 金融研究, 2020, 481(7): 114-133.
WANG Xiuhua, ZHAO Yaxiong. Does the Matthew Effect Exist in Digital Finance Development?Empirical Evidence from Poor and Non-Poor Households. Journal of Financial Research, 2020, 481(7): 114-133.
Banerjee, A. V., D. Esther and G. Rachel et al., 2015, “The Miracle of Microfinance？ Evidence from a Randomized Evaluation”, American Economic Journal: Applied Economics, 7(1):22~53.
[29]
Bauer, J. M., 2018, “The Internet and Income Inequality: Socio-economic Challenges in a Hyperconnected Society”,Telecommunications Policy, 42(4):333~343.
[30]
Bruhn, M. and I. Love., 2014, “The Real Impact of Improved Access to Finance: Evidence from Mexico”,Journal of Finance, 69(3):1347~1376.
[31]
Burgess, R, R. Pande and G. Wong., 2005, “Banking for the Poor: Evidence from India”,Journal of the European Economic Association, 3(2/3):268~278.
[32]
Dupas, P. and J. Robinson., 2013, “Why Don't the Poor Save More？ Evidence from Health Savings Experiments”,American Economic Review, 103(4):1138~1171.
[33]
Hau, H., Y., Huang, H. Shan and Z. Sheng, 2017, “Tech-Fin in China: Credit Market Completion and Its Growth Effect,” Working Paper.
[34]
Ho, C. C. and S. F. Tseng, 2006, “From Digital Divide to Digital Inequality: the Global Perspective”,International Journal of Internet & Enterprise Management, 4(3):215~227.
[35]
Huang, Y, C. Lin, Z. Sheng and L Wei, 2018, “Fin-Tech Credit and Service Quality”,Working Paper.
[36]
Pan, Y, M. Yang, S. Li, et al. 2017, “The Impact of Mobile Payments on the Internet Inclusive Finance”,Journal of Management & Sustainability, 6(4):97.
[37]
Pierrakis, Y and L. Collins, 2013, “Crowdfunding: A New Innovative Model of Providing Funding to Projects and Businesses”,Ssrn Electronic Journal.
