The Impact of Fintech on Poverty Reduction: Evidence from China
Abstract
:1. Introduction
2. Literature Review and Hypothesis Development
2.1. Literature Review
2.2. Hypothesis Development
3. Methodology
3.1. Data
3.2. Empirical Model
4. Results and Discussion
4.1. Direct Effect
4.2. Indirect Effect
4.3. Regional Analysis
4.4. Province-Specific Effect of Fintech on Household Per Capita Consumption
4.4.1. Province-Specific Effect of Third-Party Payment on Household Per Capita Consumption
4.4.2. Province-Specific Effect of Credit on Household Per Capita Consumption
4.4.3. Province-Specific Effect of Fintech on Household Per Capita Consumption
5. Conclusions and Policy Implication
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Company | Product/Service | Brand Name | Description |
---|---|---|---|
Alibaba | Payments, settlement, remittances | Alipay | Established in 2004 as a third-party payment platform to provide payment solutions to Alibaba’s Taobao C2C site. Can be used to pay utility and credit card bills and transfer funds to participating banks. Has also started to extend credit to consumers based on their repayment histories. |
Lending | Ali Microfinance | Microfinance company that extends credit to merchants of Alibaba B2B site, Taobao C2C site, and Tmall B2C site. Also securitizes loans to microenterprises. | |
Fund management | Yu’E Bao | See the development of Fintech | |
Taobao Wealth Management | First online third-party fund sales platform (November 2013). Provides sales support to fund distributors. | ||
Alibaba, China Ping An Insurance & Tencent | Insurance sales | Zhong An Online Property Insurance | Sells insurance and settles insurance claims without bricks-and-mortar branches (November 2013) |
Tencent | Payments | Tenpay | Payment service similar to Alipay |
Fund management | WeChat is a messaging app like Line. WeChat wealth management products were launched in January 2014. | ||
Renrendai | P2P lending | Established in May 2010 | |
Demohour | Crowdfunding | Established in May 2011 | |
China Construction Bank | E-commerce, financial services | Shanrong | B2B and B2C e-commerce platform (June 2012). Industrial and Commercial Bank of China’s Rong-e-Guo (B2C) platform went live in January 2014. Bank of China, Bank of Communications et. al. also have similar platforms. |
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Variables | Definition | Mean | Obs. | Std. Dev. | Min | Max |
---|---|---|---|---|---|---|
lncpc | Household per capita consumption | 1.556 | 217 | 0.898 | −1.315 | 3.485 |
lngdp | Economic growth | 10.740 | 217 | 0.463 | 9.706 | 13.405 |
lnto | Trade openness | 8.705 | 217 | 1.391 | 4.632 | 11.760 |
lninf | Inflation | 0.816 | 217 | 0.486 | −0.511 | 1.841 |
lnfd | Financial development | 9.931 | 193 | 0.833 | 7.710 | 11.744 |
lnif | Fintech | 4.973 | 217 | 0.678 | 2.786 | 5.819 |
lntpp | Third-party payment | 4.805 | 215 | 0.689 | 2.381 | 5.840 |
lncredit | Credit | 4.547 | 217 | 0.662 | 0.148 | 5.446 |
Variables | lncpc | lngdp | lnto | lninf | lnfd | lnif | lntpp | lncredit |
---|---|---|---|---|---|---|---|---|
lncpc | 1 | |||||||
lngdp | 0.418 *** | 1 | ||||||
lnto | −0.353 *** | 0.394 *** | 1 | |||||
lninf | −0.0903 | −0.192 ** | 0.0864 | 1 | ||||
lnfd | −0.242 *** | 0.632 *** | 0.816 *** | −0.254 *** | 1 | |||
lnif | 0.279 *** | 0.466 *** | 0.0937 | −0.774 *** | 0.453 *** | 1 | ||
lntpp | 0.209 ** | 0.460 *** | 0.191 ** | −0.709 *** | 0.545 *** | 0.906 *** | 1 | |
lncredit | 0.0724 | 0.516 *** | 0.375 *** | −0.628 *** | 0.664 *** | 0.816 *** | 0.850 *** | 1 |
Variables | Model 1 | Model 2 | Model 3 | Model 4 | Model 5 | Model 6 | Model 7 | Model 8 | Model 9 |
---|---|---|---|---|---|---|---|---|---|
OLS | RE | IV-GMM | |||||||
lngdp | 1.576 *** | 1.664 *** | 1.734 *** | 0.177 | 0.250 | 0.145 | 1.930 *** | 2.057 *** | 2.166 *** |
(0.321) | (0.298) | (0.330) | (0.301) | (0.267) | (0.303) | (0.125) | (0.118) | (0.124) | |
lninf | 0.320 ** | 0.236 ** | −0.064 | 0.051 * | 0.051 | −0.062 | 0.200 * | 0.168 | 0.030 |
(0.143) | (0.101) | (0.109) | (0.029) | (0.032) | (0.057) | (0.116) | (0.110) | (0.105) | |
lnfd | −1.057 *** | −1.198 *** | −1.002 *** | −0.043 | −0.285 ** | 0.144 | −1.220 *** | −1.212 *** | −1.097 *** |
(0.112) | (0.121) | (0.103) | (0.150) | (0.140) | (0.159) | (0.119) | (0.132) | (0.122) | |
lnto | 0.035 | 0.070 | −0.017 | −0.170 *** | −0.088 * | −0.168 ** | 0.029 | 0.010 | −0.060 |
(0.081) | (0.087) | (0.075) | (0.063) | (0.053) | (0.074) | (0.067) | (0.074) | (0.064) | |
lnif | 0.600 *** | 0.261 *** | 1.337 *** | ||||||
(0.176) | (0.062) | (0.224) | |||||||
lntpp | 0.622 *** | 0.380 *** | 0.720 *** | ||||||
(0.137) | (0.056) | (0.105) | |||||||
lncredit | 0.252 ** | 0.129 ** | 0.368 *** | ||||||
(0.121) | (0.060) | (0.133) | |||||||
Constant | −8.512 *** | −8.301 *** | −8.145 *** | 0.246 | 0.614 | −0.466 | −14.534 *** | −12.374 *** | −12.067 *** |
(2.475) | (2.577) | (3.047) | (2.448) | (2.204) | (2.411) | (0.966) | (0.904) | (1.015) | |
R2 | 0.679 | 0.692 | 0.633 | 0.805 | 0.785 | 0.772 | |||
R2_O | 0.370 | 0.431 | 0.167 | ||||||
R2_B | 0.540 | 0.587 | 0.371 | ||||||
RHO | 0.779 | 0.812 | 0.829 | ||||||
RMSE | 0.505 | 0.493 | 0.540 | 0.242 | 0.228 | 0.236 | 0.389 | 0.406 | 0.420 |
F | 101.791 | 131.705 | 51.296 | 195.198 | 165.545 | 131.558 | |||
J | 2.615 | 0.537 | 0.327 | ||||||
JP | 0.106 | 0.464 | 0.567 | ||||||
VIF | 4.04 | 3.84 | 3.70 |
Variables | Model 1 | Model 2 | Model 3 | Model 4 | Model 5 | Model 6 |
---|---|---|---|---|---|---|
Economic Growth Channel | Financial Development Channel | |||||
lnif × lngdp | 1.572 *** | |||||
(0.585) | ||||||
lntpp × lngdp | 0.111 | |||||
(0.734) | ||||||
lncredit × lngdp | 1.505 | |||||
(1.069) | ||||||
lnif × lnfd | 0.674 * | |||||
(0.354) | ||||||
lntpp × lnfd | −0.100 | |||||
(0.200) | ||||||
lncredit × lnfd | 0.355 * | |||||
(0.212) | ||||||
Controls | Yes | Yes | Yes | Yes | Yes | Yes |
Constant | 76.972 ** | −6.056 | 66.788 | 21.907 | −17.677 | 5.410 |
(33.901) | (41.478) | (56.022) | (19.066) | (10.747) | (10.510) | |
R2 | 0.819 | 0.790 | 0.801 | 0.810 | 0.781 | 0.797 |
RMSE | 0.375 | 0.401 | 0.393 | 0.384 | 0.410 | 0.397 |
F | 160.200 | 149.158 | 132.027 | 145.211 | 146.716 | 135.325 |
J | 0.452 | 3.641 | 0.026 | 1.662 | 2.717 | 0.008 |
JP | 0.501 | 0.056 | 0.872 | 0.197 | 0.099 | 0.928 |
Variables | Model 1 | Model 2 | Model 3 | Model 4 | Model 5 | Model 6 | Model 7 | Model 8 | Model 9 |
---|---|---|---|---|---|---|---|---|---|
Eastern | Central | Western | |||||||
lngdp | 2.148 *** | 2.261 *** | 2.313 *** | 0.513 | 0.799 | 1.299 *** | 1.100 *** | 1.364 *** | 1.366 *** |
(0.134) | (0.139) | (0.138) | (0.533) | (0.510) | (0.497) | (0.136) | (0.122) | (0.123) | |
lnto | 0.173 ** | 0.156 ** | 0.121 | −0.285 | −0.245 | −0.117 | −0.034 | −0.086 *** | −0.099 *** |
(0.068) | (0.078) | (0.086) | (0.190) | (0.169) | (0.163) | (0.032) | (0.033) | (0.035) | |
lninf | 0.282 ** | 0.264 * | 0.199 | −0.078 | −0.042 | −0.181 ** | 0.145 * | 0.096 | −0.054 |
(0.143) | (0.157) | (0.146) | (0.065) | (0.061) | (0.073) | (0.081) | (0.072) | (0.099) | |
lnfd | −1.376 *** | −1.348 *** | −1.422 *** | −1.069 *** | −1.250 *** | −1.354 *** | −1.206 *** | −1.132 *** | −1.130 *** |
(0.113) | (0.127) | (0.152) | (0.149) | (0.175) | (0.213) | (0.078) | (0.079) | (0.094) | |
lnif | 1.524 *** | 1.282 *** | 1.404 *** | ||||||
(0.204) | (0.192) | (0.247) | |||||||
lntpp | 0.756 *** | 0.829 *** | 0.645 *** | ||||||
(0.095) | (0.188) | (0.124) | |||||||
lncredit | 1.021 *** | 0.977 *** | 0.371 *** | ||||||
(0.220) | (0.219) | (0.104) | |||||||
Constant | −17.698 *** | −14.795 *** | −15.295 *** | 1.953 | 2.888 | −2.872 | −5.517 *** | −4.421 *** | −2.733 * |
(0.909) | (0.941) | (1.069) | (6.429) | (6.420) | (5.770) | (1.375) | (1.336) | (1.564) | |
R2 | 0.919 | 0.901 | 0.896 | 0.672 | 0.631 | 0.663 | 0.969 | 0.966 | 0.966 |
RMSE | 0.255 | 0.282 | 0.289 | 0.371 | 0.394 | 0.376 | 0.147 | 0.153 | 0.153 |
F | 210.143 | 177.264 | 139.526 | 92.674 | 55.342 | 28.930 | 331.349 | 224.591 | 323.055 |
J | 5.216 | 0.196 | 1.386 | 0.122 | 0.902 | 0.177 | 0.037 | 0.026 | 1.644 |
JP | 0.022 | 0.658 | 0.239 | 0.727 | 0.342 | 0.674 | 0.847 | 0.873 | 0.200 |
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Appiah-Otoo, I.; Song, N. The Impact of Fintech on Poverty Reduction: Evidence from China. Sustainability 2021, 13, 5225. https://doi.org/10.3390/su13095225
Appiah-Otoo I, Song N. The Impact of Fintech on Poverty Reduction: Evidence from China. Sustainability. 2021; 13(9):5225. https://doi.org/10.3390/su13095225
Chicago/Turabian StyleAppiah-Otoo, Isaac, and Na Song. 2021. "The Impact of Fintech on Poverty Reduction: Evidence from China" Sustainability 13, no. 9: 5225. https://doi.org/10.3390/su13095225