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| Inclusive Finance and Entrepreneurship: “Give people a fish” or “Teach people to fish”？ |
| LI Jianjun, LI Juncheng
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| School of Finance, Central University of Finance and Economics |
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Abstract As the economy transitions to more advanced versions of “the new normal,” the Chinese government has issued a call for “mass entrepreneurship and innovation” to inject new vitality into economic development. A sound financial system plays a vital role in promoting entrepreneurship. The “Promoting Inclusive Financial Development Plan (2016-2020)” emphasizes that “It is necessary to improve the availability of financial services and substantially improve financial support for entrepreneurs, entrepreneurial college students, and disabled workers.”
This paper focuses on the relationship between financial support and entrepreneurial activities, and investigates the influence and role of inclusive finance on entrepreneurship. Using data from the 2015 China household finance survey, this paper finds that the development of inclusive finance has a significant positive impact on the improvement of entrepreneurial activities, and compared with the use of inclusive finance, its penetration has a more important and fundamental impact on entrepreneurship. The results of the mechanism test show that inclusive finance promotes entrepreneurship not by relieving the constraint of limited family funds, but mainly through the improvement of residents' financial ability. Due to the popularization of financial education, the role of inclusive financial development in promoting entrepreneurship will be strengthened. Moreover, by distinguishing different dimensions of inclusive finance, it can be found that the moderating effect of financial education on the relationship between inclusive finance and entrepreneurship is realized by improving the enhancement effect of financial service usage on entrepreneurship. This paper's research shows that compared with traditional financial development, the realization of financial expansion is more conducive to stimulating residents' entrepreneurial spirit. Inclusive finance plays a significant role in promoting entrepreneurship, which can provide guidance for China in developing inclusive finance. First, it is necessary to improve top-level design and promote inclusive financial development. Top-level design will allow the overall financial system to better provide financial services to vulnerable areas, regions, and groups, and help the economy achieve fuller, more balanced development. Second, it is important to expand the breadth of services and improve their availability. To give full play to the supporting effect of inclusive finance on entrepreneurs, it is vital to reasonably distribute the network layout, sink the center of gravity of financial services, and get through the “last mile” of financial services. Third, it is important to focus on coordinated development and establish a financial service system that benefits all. Inclusive finance development should not only strengthen credit support, but also promote the upgrading of exchange media, improve payment and clearing services and expand risk management channels so that residents can fully enjoy the benefits brought by inclusive finance development.
The contributions of this paper are as follows. First, the financial broadening perspective is vital for the study of financial support for entrepreneurship, but the supporting role of inclusive finance in entrepreneurship is at present rarely discussed.This paper studies the supporting role of inclusive finance in entrepreneurship from the perspective of financial expansion.Second, with the help of China household financial survey data and principal component analysis, this paper measures the level of inclusive finance from the micro perspective. Thirdly, most studies have focused on the impact of financing mechanisms on entrepreneurial activities. This paper studies the mediating effect of various financial capabilities, including capital supply and use of exchange media, risk perception and risk management, on the capacity of inclusive finance to promote entrepreneurship.
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Received: 28 February 2019
Published: 10 February 2020
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