Economic Impacts of Financial Inclusion: From Different Perspectives in China

Abstract

As societies evolve, finance plays a crucial role in resource allocation. However, financial services face challenges such as financial exclusion, which limits access to formal financial system. In response, micro-credit and micro-finance emerged but proved inadequate. Consequently, the concept of financial inclusion was developed, aiming to provide accessible and affordable financial services to all individuals and groups. This dissertation examines the impact of financial inclusion across three perspectives: individual income, enterprise performance, and national economic development.

From the perspective of individual income, the study investigates the effects of financial inclusion on rural residents in China using panel data from 26 provinces between 2010 and 2019. By disaggregating income into agricultural and non-agricultural sources, the analysis uncovers varying impacts across different thresholds of financial inclusion. For enterprise performance, the research focuses on small and medium-sized enterprises listed on the Beijing Stock Exchange. Utilizing decision-making theories and the Empirical Welfare Maximization framework, the study evaluates whether SMEs benefit equally from public listing, revealing that the advantages of going public are not uniform. From the perspective of national economic development, the research explores the spatial effects of financial inclusion on countries participating in the Belt and Road Initiative, demonstrating its positive influence on GDP while identifying significant spatial spillover effects.

This comprehensive analysis affirms the critical role of financial inclusion in improving access to financial services, enhancing individual welfare, supporting SME growth, and fostering national economic development. However, the findings also highlight potential challenges, such as the adverse effects on agricultural incomes in China that may threaten food security, burdens placed on certain SMEs that hinder their growth, and uneven benefits among developing nations within the BRI. These complexities underscore the need for tailored financial inclusion strategies that address the specific circumstances and challenges faced by different regions, sectors, and stakeholders.