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| Digital Credit and Household Economic Risks: Helping Hand or Grasping Hand? |
| SONG Quanyun, LI Duoyi, CHENG Ruiqi
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| School of Finance, Southwestern University of Finance and Economics |
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Abstract As a pivotal determinant of economic and financial behaviors, household economic risk has emerged as a central concern for policymakers. At present, China's household sector confronts pronounced economic vulnerabilities, stemming from excessive reliance on labor income, insufficient social safety nets, and elevated debt-to-income ratio. Mitigating these risks is not merely a microeconomic imperative but a macro-critical precondition for bolstering the resilience of China's economic growth and advancing common prosperity. Existing studies have proved the role of constructing social credit system in alleviating household economic risk. However, the traditional social credit system has notable deficiencies in terms of development level, coverage breadth, and connection accuracy, which may impede the equitable and efficient transmission of credit benefits to all residents.
With the rapid development of the digital economy and Fintech, digital credit has restructured the traditional credit assessment system through big data, artificial intelligence, and other technologies. By using non-traditional data to replace traditional collateral, it provides financial services for those lacking credit records, becoming an important driving force for financial inclusion. The penetration of digital credit in residents' lives has led to the complexification of household economic risks. On the one hand, by enabling timely access to credit, digital credit facilitates intertemporal consumption smoothing and provides critical liquidity buffers against unforeseen shocks, thereby strengthening households' risk management capacity and reducing economic risk. On the other hand, digital credit may also lead to excessive consumption, induce excessive debt and increase fraud risks, thereby possibly increasing household economic risks. Against this backdrop, empirical investigation grounded in nationally representative microdata is essential to explore the effect of digital credit on household economic risk. Such analysis not only advances theoretical understanding of the role digital credit plays in improving household resilience but also informs broader policy goals of fostering inclusive digital credit development and sustaining household economic health.
Drawing on the 2021 and 2023 waves of the China Household Finance Survey data, this paper measures household economic risk by financial fragility and explores the potential impact and mechanism of digital credit on household economic risk. The research finds that digital credit helps reduce household economic risk, and this conclusion remains robust after considering potential endogeneity issues, alternative variable measurements, and sample selection issues. In terms of the mechanism, the liquidity support, commercial insurance participation, and expansion of income channels enabled by digital credit can effectively alleviate household economic risk. Heterogeneity analysis shows that the risk mitigation effect of digital credit on household economic risk has certain thresholds, households with stable employment, reasonable debt, high digital literacy, and high financial literacy can benefit more from digital credit. Further analysis of economic consequences indicates that the mitigation of household economic risk driven by digital credit can enhance household consumption and promote the upgrading of consumption structure.
Based on the above conclusions, this paper proposes the following suggestions:
First, the government should continue to promote the construction and digitalization of the social credit system, accelerate the social integration and sharing of credit information data, clarify the legal status and data usage boundaries of digital credit, and create a favorable institutional environment for the high-quality development of digital credit.
Second, targeted measures are needed to enhance the accessibility of digital credit services for vulnerable groups. These include delivering targeted training, refining credit scoring models, and designing inclusive financial products,which can collectively lower the access threshold of digital credit services for under-served populations. Credit repair mechanisms should also be established to support the sustainable integration of vulnerable groups into the digital credit system.
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Received: 16 September 2025
Published: 14 July 2026
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