Is the Development of China’s Financial Inclusion Sustainable? Evidence from a Perspective of Balance

Abstract

Balance plays an important role in the sustainable development of China's financial inclusion. First, this paper reports the entropy weight method used to construct a financial inclusion index (FII) and measure the level of development of financial inclusion in China's regions. Second, the concept of the Gini coefficient of financial inclusion is proposed and the structural balance of China's financial inclusion is shown, as calculated by using this Gini coefficient. Third, we report the use of a dynamic shift-share model to further discuss the development balance of the financial inclusion of China's regions. The results show that there is an imbalance in the development of financial inclusion in China's regions. For 2006-2016, the Gini coefficient and the structural balance of China's financial inclusion show a significant downward trend. The gap of the financial inclusion development between regions is narrowing and the structure of China's financial inclusion tends to be reasonable. The penetration dimension is at a structural disadvantage. Availability and usage dimension are at a structural advantage, which can effectively promote the development of China's financial inclusion. In the future, the government should establish a more balanced financial inclusion development mechanism, making full use of structural advantages of the availability and usage of financial services to promote the sustainable development of China's financial inclusion.

The Sustainable Development of Financial Inclusion: How Can Monetary Policy and Economic Fundamental Interact with It Effectively?

“…Secondly, the economy and finance coordinating is of great importance, which means the mutual promotion of economy and finance. The pursuit of excessive GDP growth is likely to incur structural economic problems, i.e., the imbalance of regional economic development, which will adversely affect the sustainable development of financial inclusion [4]. This imbalance will lead to the polarization of the rich and the poor, and from a financial perspective, it is reflected in the uneven distribution of financial resources.…”

“…A single financial institution ought to be facilitated with more financial inclusion for the entrepreneurial scene and gaining new competitive advantages to maintain its sustainability. Zhu et al (2018) asserted that it is a good way to evaluate the sustainability by measuring the balance of financial inclusion [4]. Social networks can help informal financial inclusion fully and partially guard against systematic risks from the institutional environment (Chai et al, 2018) [31].…”

“…Referring to the Sustainable Development Goals, the goal of sustainable financial inclusion is to provide financial support to vulnerable groups based on equal opportunities, help them reduce poverty, thereby reducing social inequality and achieving stable economic growth (https://www.undp.org/ content/undp/en/home/sustainable-development-goals.html). At present, there exists a regional imbalance in the development of China's inclusive finance, and the sustainability of financial inclusion is insufficient (Zhu et al, 2018) [4] It motivates us to seek the favorable environment to promote the sustainable development of China's financial inclusion. The Global Microscope 2018 on Financial Inclusion released by The Economist Intelligence Unit assessed the enabling environment for financial inclusion in 55 countries and five domains were selected by numbers of experts to define the enabling environment (https://www.eiu.com/public/topical_report.aspx?campaignid=Microscope2018).…”

Internet Penetration and Regional Financial Development in China: Empirical Evidence Based on Chinese Provincial Panel Data

“…Table 4 shows the impact of network popularity on financial development. In addition, the analysis of the individual fixed effect model in equation (1) found that the analysis results are not significant, and there is no time lag effect on the penetration rate of the Internet and the production value of the financial industry.…”

“…e development of regional financial industry is affected by many factors, among which the level of regional economic development and the level of information technology are important to sustainable development of financial industry [1]. e influence of Internet on economy is various, from improving technical productivity to increasing foreign direct investment, from inflation to political and economic problems, and from corruption to democratic and free issues [2,3].Governments of many developed and developing countries have recognized the huge growth potential of the Internet for their economy, and some countries have taken measures to greatly increase the construction of Internet infrastructure and increase the penetration rate of the Internet [4].…”