Evaluating the effects of digital finance on urban poverty

• Published in: Socio-economic planning sciences 2024-12, Vol.96, p.102099, Article 102099
• Main Authors: Duan, Zhimin, Yuan, Fangjie, Tian, Zhengjie
• Format: Article
• Language: English
• Subjects: Digital finance; Multidimensional poverty; Urban poverty
• ISSN: 0038-0121
• DOI: 10.1016/j.seps.2024.102099

This study examines the impact of digital financial services development on urban poverty. Utilizing the vicious cycle of poverty theory, we established a multidimensional poverty measurement index to assess the poverty status of urban households and propose strategies for leveraging digital finance to address urban poverty. Through empirical research based on a comprehensive dataset from China covering the period from 2012 to 2020, we evaluated the moderating effect of digital financial growth on urban poverty. Our analysis, which categorized poor urban households into five groups—laid-off workers, unemployed individuals, migrants, the elderly, and disabled persons—revealed that only the unemployed and migrants experience significant benefits from digital financial development. Lastly, we explore the underlying mechanisms and emphasize the role of investment, financing, and entrepreneurship in utilizing digital finance for poverty alleviation. •We created a multidimensional indicator system to identify urban poor households from the vicious cycle of poverty theory.•Developed two instrumental variables to clarify the causal link between digital finance and urban poverty.•Categorized urban poverty groups based on their context and concepts.•Digital finance aids in reducing multidimensional urban poverty, offering strategies for other developing nations.