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Does digital finance promote household consumption upgrading? An analysis based on data from the China family panel studies

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  • Hu, Debao
  • Zhai, Chenzhe
  • Zhao, Sibo

Abstract

The relationship between digital financial development and household consumption has drawn much attention from both academia and policymakers. Previous studies have documented that digital financial development fosters the growth of household consumption expenditure, but little attention is paid to its impact on household consumption upgrading. Using China Family Panel Studies data and Digital Financial Inclusion Index, we examine the impact of digital financial development on Chinese household consumption structure. We find that the development of digital finance promotes household consumption upgrading. Liquidity constraints, payment convenience, investment efficiency and household risk-hedging ability are proven to be important channels in the mechanism. Our findings are robust to the dynamic GMM estimation and instrumental variable analysis. It implies that the government should devote more efforts to developing digital finance to promote consumption upgrading, and hence economic growth.

Suggested Citation

  • Hu, Debao & Zhai, Chenzhe & Zhao, Sibo, 2023. "Does digital finance promote household consumption upgrading? An analysis based on data from the China family panel studies," Economic Modelling, Elsevier, vol. 125(C).
    • Handle: RePEc:eee:ecmode:v:125:y:2023:i:c:s026499932300189x
    DOI: 10.1016/j.econmod.2023.106377
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    References listed on IDEAS

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    More about this item

    Keywords

    Digital finance; Household consumption; Consumption upgrading; China Family Panel Studies;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G5 - Financial Economics - - Household Finance
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis

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