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Digital financial inclusion and public service equalization

Author

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  • Yang, Yanwu
  • Gong, Bing

Abstract

While digital technologies transform financial servicesglobally, research examining their impact on public resource distribution remains limited, especially regarding regional variations in effectiveness. Prior studies have separately addressed digital finance adoption or public service delivery, neglecting their interconnected role in development. Analyzing Chinese provincial data (2011–2021) through fixed effects and instrumental variable approaches, we find that digital financial inclusion significantly enhances public service equity, particularly in regions with advanced innovation capabilities and established technological infrastructure. Our analysis reveals two key mechanisms: reduced metropolitan-rural disparities and industrial structure optimization, with effects most pronounced in eastern provinces and high-innovation regions. The findings show that both service accessibility and usage intensity contribute to balanced resource allocation, though effectiveness varies substantially with regional innovation capacity. These results indicate that technological advancement in financial services can promote regional equity when aligned with local innovation capabilities, providing strategic insights for policymakers developing targeted digital finance initiatives across diverse development contexts.

Suggested Citation

  • Yang, Yanwu & Gong, Bing, 2025. "Digital financial inclusion and public service equalization," Finance Research Letters, Elsevier, vol. 71(C).
    • Handle: RePEc:eee:finlet:v:71:y:2025:i:c:s1544612324014697
    DOI: 10.1016/j.frl.2024.106440
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    Keywords

    Digital finance accessibility; Public resource distribution; Regional development; Industrial transformation; Technological inclusion;
    All these keywords.

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • H75 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Government: Health, Education, and Welfare
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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