【Abstract】

In this paper, we investigate the impact of financial development on rural residents’ income and consumption levels in China. We discover that the development of traditional financial services has little impact on the income and consumption levels of rural residents. In contrast, the development of emerging financial services has a significant positive impact on the income and consumption levels of rural residents. Traditional financial services, as is well known, require collateral and high expected future cash flows from customers, making financial inclusion difficult. Emerging financial services in China are special financial services promoted by financial regulators to support technological innovation, cultural development, environmental protection, and rural development. Our findings suggest that these emerging financial services are effective in increasing the income and consumption levels of rural residents. Interestingly, while emerging financial services that directly target rural development have no significant impact on rural residents' income and consumption, financial support for technological advancement and cultural development appears to be more effective in increasing rural residents' income and consumption.

【Keywords】

Financial development; Income and consumption level of rural residents; China

【Authors】

Qian Zongxin, Senior Research Fellow of IMI, School of Finance, Renmin University of China

Tu Yonghong, Deputy Director of IMI, School of Finance, Renmin University of China, and Yangtze River Economic Zone Research Institution of RUC

Zhou Zinan, China Life Asset Management Company Limited.