Exploring the Dynamic Impact of Digital Financial Literacy on Rural Household Income: New Evidence from China

Yue Yu, Wenjing Li, Huarong Li, Shuming Luo and Yan Liu ()
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Yue Yu: College of Economics, Sichuan Agricultural University, Chengdu 611130, China
Wenjing Li: College of Economics, Sichuan Agricultural University, Chengdu 611130, China
Huarong Li: College of Economics, Sichuan Agricultural University, Chengdu 611130, China
Shuming Luo: College of Economics, Sichuan Agricultural University, Chengdu 611130, China
Yan Liu: College of Economics, Sichuan Agricultural University, Chengdu 611130, China

Sustainability, 2025, vol. 17, issue 8, 1-23

Abstract: Digital financial literacy, as an upgrade of financial literacy in the digital age, has a non-negligible impact on the income of farm households and the sustainable development of the rural economy. This study aims to investigate the impact of digital financial literacy on rural household income in China and its mechanism of action. Using the sample of rural households in the 2019 China Household Finance Survey (CHFS), which ultimately collected information on 34,643 households and 107,008 household members, the principal component analysis method was used to analyze scores to measure the digital financial literacy level of rural households at three levels—financial knowledge, financial skill application, and digital skills and digital product use—and to perform mechanism analysis and heterogeneity analysis with inclusive finance data from the Digital Finance Research Center of Peking University. The research ideas in this paper are as follows: firstly, to clarify the metric index system of digital financial literacy and calculate to obtain the digital financial literacy score of farmers; secondly, to analyze the direct relationship between digital financial literacy and farmers’ household income; thirdly, to explore the intermediary role of social capital in the process of digital financial literacy affecting farmers’ income; and lastly, to examine the moderating effect of the level of regional financial development. The findings of this study show that digital financial literacy has a significant income-increasing effect on rural residents; mechanism analysis reveals that digital financial literacy increases farmers’ income by increasing social capital, and the level of regional financial development mediates the impact of digital financial literacy on rural household income. From a macro perspective, this article explains the necessity of improving rural households’ digital financial literacy to deepen rural financial services as well as to promote sustainable rural economic development. From a micro perspective, improving rural households’ digital financial literacy and digital financial infrastructure will help optimize their household income levels and income structure. This study provides empirical evidence and decision-making references for increasing farmers’ income, broadening income channels, and improving farmers’ digital human capital to achieve “rural revitalization” in the new era.

Keywords: digital financial literacy; farmer household income; social capital; digital skills; digital products (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2025
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