The Impact of Mobile Finance Use on Livelihoods of Farmers in Rural China

ABSTRACT

Mobile finance plays an important role in supporting productive activities and improving the basic livelihoods of rural households. Using three-round panel data and employing control function approach to address the self-selection bias issue, this study shows that mobile finance use significantly increases farmers’ livelihoods, measured by farm income and per capita consumption in China, with a larger marginal effect for smallholders and credit-constrained farmers. We further divide mobile finance into two types and reveal that the mobile payment use plays a larger role in farm income, while the mobile banking use has a larger impact on household consumption.

KEYWORDS:

• Mobile finance
• financial inclusion
• household livelihood
• China

Acknowledgments

This work was supported by the National Natural Science Foundation of China under Grant number 71761147004, 71973138 and 71573262; the Agricultural Science and Technology Innovation Program of CAAS under Grant number ASTIP-IAED-2021-03 and China Scholarship Council under Grant number 201903250084.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1. An alternative methodological approach could be the endogenous switching regression (ESR) model. The ESR model is not as flexible as the CF approach to study the interaction effects which is used to test the hypothesis 2. Therefore, we decided to use the CF approach in the end.

Additional information

Funding

This work was supported by the China Scholarship Council [201903250084]; National Natural Science Foundation of China [71573262,71761147004,71973138]; Agricultural Science and Technology Innovation Program of Chinese Academy of Agricultural Sciences [ASTIP-IAED-2021-03].