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Inclusive financial development and common prosperity: An empirical analysis using individual-level data

Author

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  • Luo, Hang (Robin)
  • Yan, Dawei

Abstract

The relationship between inclusive finance development (IFD) and common prosperity (CP) in China is examined in this study using data from the China Family Panel Studies (CFPS), which were carried out in 2014, 2016, 2018, and 2020. The study reveals a positive association between IFD and CP at the individual level, supporting the hypothesis that IFD facilitates the attainment of CP by easing credit constraints, advancing the third distribution, and reducing information asymmetry. It further observes temporal and regional variations in the IFD-CP relationship, noting a pronounced promotional impact in economically prosperous areas. This study contributes to the literature by employing a novel individual-level dataset and investigating three distinct influencing channels.

Suggested Citation

  • Luo, Hang (Robin) & Yan, Dawei, 2025. "Inclusive financial development and common prosperity: An empirical analysis using individual-level data," Economic Analysis and Policy, Elsevier, vol. 85(C), pages 261-274.
    • Handle: RePEc:eee:ecanpo:v:85:y:2025:i:c:p:261-274
    DOI: 10.1016/j.eap.2024.12.001
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    More about this item

    Keywords

    Inclusive financial development; Common prosperity; Credit constraint; Information asymmetry; Third distribution;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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