How Does Digital Inclusive Finance Affect Household Financial Vulnerability?

Yanhong Qian, Lei Yan and Wenli Huang

Emerging Markets Finance and Trade, 2025, vol. 61, issue 5, 1293-1314

Abstract: Based on the China Health and Retirement Longitudinal Study (CHARLS) three-wave data (2013, 2015, and 2018), this paper constructs a panel Probit model to investigate the impact of digital inclusive finance on household financial vulnerability. The empirical results show that the development of digital inclusive finance can significantly reduce household financial vulnerability. For 1% increase in digital inclusive finance, the probability of household financial vulnerability decreases by 7.0%. The results are robust after addressing endogeneity issues and altering regression models, the dependent variable, and the independent variable. Through the influencing mechanism tests, this paper finds that digital inclusive finance reduces the financial vulnerability of households by reducing credit constraints, promoting entrepreneurship, and increasing risky asset holdings. The heterogeneous effects show that the vulnerability-mitigation effect of digital inclusive finance is more significant in better-educated and younger households and in urban and developed areas.

Date: 2025
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DOI: 10.1080/1540496X.2024.2409291

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