Financial permeation and rural poverty reduction Nexus: Further insights from counties in China

Xiuhua Wang, Yipeng Wang and Yaxiong Zhao

China Economic Review, 2022, vol. 76, issue C

Abstract: We investigate how financial permeation affects rural poverty reduction by matching representative county household data with the local banking market, FinTech development, and county characteristics data from China. We discover that financial permeation via bank branch expansion boosts household income and mitigates household vulnerability to poverty, and these effects are magnified on lower-income and more vulnerable households, especially in impoverished counties. Further considering the potential substitution effect of FinTech, we verify that enhancing financial permeation via bank branch expansion still matters to rural poverty reduction even in the digital era. Exploring the channels, we find that financial permeation accelerates rural poverty reduction directly through improving financial utilization and motivating investment activities and indirectly through spurring local economic growth. Notably, the more pronounced marginal effects of the channels on households in impoverished counties, to some extent, explain the poverty reduction effect of financial permeation. The results imply the necessity of financial permeation via bank branch expansion for the realization of shared prosperity.

Keywords: Financial permeation; Bank branch expansion; Poverty reduction; FinTech (search for similar items in EconPapers)
JEL-codes: G21 G23 O18 R11 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1043951X22001213
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:76:y:2022:i:c:s1043951x22001213

DOI: 10.1016/j.chieco.2022.101863

Access Statistics for this article

China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

More articles in China Economic Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().