Can digital financial inclusion help reduce agricultural non-point source pollution?—An empirical analysis from China

In the context of financial support for rural revitalization, digital financial inclusion may become a new “gospel” to alleviate agricultural surface source pollution. Based on the panel data of 30 Chinese provinces from 2011 to 2020, the study constructs a fixed-effects model to test the mitigation effect of digital financial inclusion on agricultural non-point source pollution empirically. The study finds that: 1) Digital financial inclusion has a mitigating effect on agricultural non-point source pollution, and the abatement effect still exists after the robustness tests such as replacing the explanatory variables, reducing the sample size, and endogeneity treatment. 2) The moderating effect test shows that the income structure of farmers strengthens the mitigation effect of digital financial inclusion on agricultural non-point source pollution, i.e., the more the income structure of farmers tends to be “non-farmed”, the stronger the mitigation effect of digital financial inclusion. 3) The heterogeneity test found that all three dimensions of digital financial inclusion, including the breadth of coverage, depth of use, and degree of digitization, can mitigate agricultural non-point source pollution, but there are differences in the intensity of the effect. Compared with the northwestern part of the “hu huan yong” line, the mitigation effect of digital inclusive finance is more significant in the southeastern part of the “hu huan yong” line. 4) The threshold effect test shows that the mitigation effect of digital financial inclusion on agricultural non-point source pollution has non-linear characteristics, and there is a double threshold effect of digital financial inclusion, and the mitigation effect will be enhanced as the development level of digital financial inclusion increases.

Abstract licence: CC BY

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