Digital dividend or digital divide?——Unveiling the impact of digital financial inclusion on the poverty vulnerability of Chinese rural households

This study examines the effectiveness of Digital Financial Inclusion (DFI) in alleviating the vulnerability of expected poverty (VEP) among rural households in China by utilizing data from the China Family Panel Studies (CFPS) from 2012 to 2020. The results demonstrate a mechanism that DFI significantly reduces VEP among rural households by stimulating entrepreneurial activities. However, this mechanism exhibits a distinct ‘digital divide’ where households below the poverty line of $1.90 per day fail to utilize DFI to mitigate their VEP status, due to insufficient digital literacy, lower risk tolerance, and higher risk aversion. By analysing the marginal effects of control variables such as the head of household’s occupation, family size, and healthcare, this study provides valuable conclusions and additional empirical evidence to eliminate rural vulnerability. This study carries significant implications for extending the benefits of deepened DFI reforms to greater numbers of impoverished households.