Is the Development of Inclusive Finance Truly Able to Alleviate Poverty?——an Empirical Study Based on Spatial Effect and Threshold Effect

ABSTRACT

The inclusive finance can impose significantly varying effects on poverty alleviation. Based on the data extracted from 31 provinces across China from 2007 to 2017, the spatial panel model and the threshold regression model were established, so as to explore the spatial effect and the threshold effect between inclusive finance and poverty alleviation. Moreover, this study attempts to reveal the influencing mechanism of these two effects imposed by the inclusive finance. The study finds that: First, the inclusive finance can impose significant effects on the poverty relief efforts. Second, the threshold effect can be evidently shown given that the inclusive finance facilitates both capital inflows and outflows. However, in the longer run, the capital inflows will exceed the outflow. In the meantime, the spatial effects are revealed from the aspects of spatial heterogeneity and spatial dependence. Judging from the research findings, the Chinese authority shall pay closer attention to the development of the western regions, so as to narrow the developmental gap of inclusive finance among regions. In addition, we shall attach importance to guiding the capital inflows while reducing the capital outflows so as to speed up the crossing of the threshold.

KEYWORDS:

• Inclusive finance
• poverty alleviation
• threshold effect
• spatial effect

JEL:

• G21
• G28
• I38

Disclosure Statement

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

Author Contributions

Hui Peng and Ling Wen designed the structure and framework of this paper; Jingjing Wang and Pan Ding collected the data and performed the empirical analysis. Yangjin Zhu related policy documents and checked the language of this paper.

Additional information

Funding

This research was funded by Humanities and Social Science Youth Fund of Ministry of Education of China [No.19YJC790098]; Key Technology Research and Development Program of Shandong (Soft Science Project) [No. 2020RKB01385].