How Does Digital Finance Contribute to Sustainable Wealth Growth: Perspective from Residents’ Income

Dan Luo, Feifan Wang, Yue Gu and Jiamin Lv ()
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Dan Luo: Alibaba Business School, Hangzhou Normal University, Hangzhou 310058, China
Feifan Wang: School of Finance, Shanghai University of Finance and Economics, Shanghai 200433, China
Yue Gu: Institute of Digital Finance, Hangzhou City University, Hangzhou 310015, China
Jiamin Lv: Institute of Digital Finance, Hangzhou City University, Hangzhou 310015, China

Sustainability, 2024, vol. 16, issue 18, 1-24

Abstract: Sustainable growth relies on common prosperity, which is reflected in increasing total income and equitable income distribution. This study first proposes the theoretical mechanisms by which digital financial development affects residents’ total income and income distribution. After that, a two-stage generalized method of moments estimation model with endogeneity treatment is constructed to investigate the impact of digital finance on residents’ total income in 31 Chinese provinces. Moreover, Moran’s I and a spatial autoregression model are used to explore the impact of digital finance on residents’ income distribution. The results demonstrate that digital financial development can significantly contribute to the increase in residents’ total income in both urban and rural areas, thus contributing to regional sustainable wealth growth. In addition, digital finance has a spatial direct effect and a spatial spillover effect on the optimization of residents’ income distribution. This indicates that a region’s digital financial development benefits regional sustainable wealth growth, as it not only can improve residents’ income distribution within the same region but also can promote the income distribution of neighboring regions.

Keywords: digital finance; sustainable wealth growth; residents’ total income; income distribution; spatial effect (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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