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The impact of financial development on the income and consumption levels of China’s rural residents

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  • Qian, Zongxin
  • Tu, Yonghong
  • Zhou, Zinan

Abstract

In this paper, we investigate the impact of financial development on rural residents’ income and consumption levels in China. We discover that the development of traditional financial services has little impact on the income and consumption levels of rural residents. In contrast, the development of emerging financial services has a significant positive impact on the income and consumption levels of rural residents. Traditional financial services, as is well known, require collateral and high expected future cash flows from customers, making financial inclusion difficult. Emerging financial services in China are special financial services promoted by financial regulators to support technological innovation, cultural development, environmental protection, and rural development. Our findings suggest that these emerging financial services are effective in increasing the income and consumption levels of rural residents. Interestingly, while emerging financial services that directly target rural development have no significant impact on rural residents' income and consumption, financial support for technological advancement and cultural development appears to be more effective in increasing rural residents' income and consumption.

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  • Qian, Zongxin & Tu, Yonghong & Zhou, Zinan, 2022. "The impact of financial development on the income and consumption levels of China’s rural residents," Journal of Asian Economics, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:asieco:v:83:y:2022:i:c:s1049007822001075
    DOI: 10.1016/j.asieco.2022.101551
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    Cited by:

    1. Dongjing Chen & Xiaotong Guo, 2023. "Impact of the Digital Economy and Financial Development on Residents’ Consumption Upgrading: Evidence from Mainland China," Sustainability, MDPI, vol. 15(10), pages 1-25, May.
    2. Feng, Jie & Gao, Junhong, 2023. "Natural resource curse hypothesis and governance: Understanding the role of rule of law and political risk in the context of China," Resources Policy, Elsevier, vol. 85(PB).
    3. Cheng, Jian & Zhao, Jiangmeng & Dai, Yating & Li, Yan, 2024. "Land supply patterns and the Chinese low consumption puzzle," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 232-245.
    4. Zhenhua Zhang & Chao Hua & Marshall S. Jiang & Jianjun Miao, 2024. "The spatial spillover effect of financial growth on high-quality development: Evidence from Yellow River Basin in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-17, December.
    5. Zhou, Qiuyang, 2024. "Does the digital economy promote the consumption structure upgrading of urban residents? Evidence from Chinese cities," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 543-551.
    6. He, Qiao & Xie, Henglang & Zhu, Yichang & Huang, Lingyu, 2024. "The impact of natural resource, information and communication technology adoption, and economic expansion on financial development in post COVID era," Resources Policy, Elsevier, vol. 89(C).

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    More about this item

    Keywords

    Financial development; Income and consumption level of rural residents; China;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G2 - Financial Economics - - Financial Institutions and Services
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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