Is Financial Inclusion Effective in Reducing Poverty? Evidence from China

Abstract

Despite tremendous development efforts in recent decades, rapid economic development and great achievements in poverty alleviation, there is still an issue of income inequality in China. This paper examines whether financial inclusion reduces income inequality in China. A time-series data are collected, and a Grey relational analysis method is used to perform the analysis. The research results show that financial inclusion and income fairness are positively correlated; financial inclusion to a certain extent expands the breadth of the financial system, increases the coverage of financial products and services, and enables small and medium-sized enterprises to obtain more financing to produce or invest in high-yield projects, plays a role in optimizing resource allocation, improving production efficiency, and promoting income equality. At the same time, financial inclusion is obvious in alleviating financial exclusion and can be used as an important market tool to promote income equality. From the perspective of poverty eradication and social equality, it is of great significance to vigorously develop inclusion financial to promote the sustainable and balanced development of the finance and enhance social equality and social harmony.

Financial Inclusion and Economic Empowerment

“…Factors such as corruption control, government effectiveness, and political stability significantly influence financial inclusion (Eldomiaty et al, 2020). Financial inclusion is viewed as a means to reduce poverty, enhance social equality, and promote balanced financial development (Long et al, 2022).…”