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Digital financial inclusion and illegal fundraising in China

Author

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  • Jennifer T Lai
  • Jing Xie
  • Shiyun Cao
  • Hao Zhang

Abstract

This paper investigates the impact of digital financial inclusion on illegal fundraising activities in China. From the China Judgments Online website, we extract data of criminal court cases of illegal fundraising from 2013 to 2019, during which both the illegal fundraising court cases and the development of digital finance displayed a rising trend. We then evaluate if digital financial inclusion may have worsened illegal fundraising activities. We find that digital financial inclusion has a positive effect on illegal fundraising activities. This effect remains robust under alternative measures of the intensity of illegal fundraising activities and when instrumental variable estimations are used to tackle potential endogeneity problems. Furthermore, convenient banking services are an important channel through which digital financial inclusion exerts its positive impact on illegal fundraising. Therefore, while active promotions of digital finance could benefit economic development, it is also necessary to timely improve the supervision of emerging finance to guard against financial risks.

Suggested Citation

  • Jennifer T Lai & Jing Xie & Shiyun Cao & Hao Zhang, 2022. "Digital financial inclusion and illegal fundraising in China," Applied Economics, Taylor & Francis Journals, vol. 54(48), pages 5575-5590, October.
    • Handle: RePEc:taf:applec:v:54:y:2022:i:48:p:5575-5590
    DOI: 10.1080/00036846.2022.2047601
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    Cited by:

    1. Xiaoling Song & Jiaqi Li & Xueke Wu, 2024. "Financial inclusion, education, and employment: empirical evidence from 101 countries," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.
    2. Fu, Tong & Li, Zijun & Qiu, Zhaoxuan & Tong, Xinle, 2024. "The policy gap between finance and economy: Evidence from China's green finance policy," Energy Economics, Elsevier, vol. 134(C).
    3. Luo, Haohan & Wang, Haijun & Wu, Ying, 2024. "Digital financial inclusion and tourism development," International Review of Economics & Finance, Elsevier, vol. 90(C), pages 207-219.
    4. Chang’an Liang & Guoming Du & Zhaoda Cui & Bonoua Faye, 2022. "Does Digital Inclusive Finance Enhance the Creation of County Enterprises? Taking Henan Province as a Case Study," Sustainability, MDPI, vol. 14(21), pages 1-17, November.

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