THE IMPACT OF INCLUSIVE FINANCIAL ON THE POVERTY VULNERABILITY OF FARM HOUSEHOLDS IN CHINA

Abstract

Based on data from the China Family Panel Studies (CFPS), this study uses the propensity score matching (PSM) method to measure the poverty vulnerability of farm households based on the vulnerability theory of expectation poverty and to analyze their likelihood of falling into poverty in the future. The results of the study show that, firstly, in general, the effective implementation of inclusive financial policies has significantly reduced the poverty vulnerability of farm households, which has been reduced by about 6.8%. This shows that inclusive finance has a significant improvement effect on the poverty vulnerability of farm households, reducing the probability of farm households falling into poverty in the future. Secondly, in terms of regional location, inclusive finance improves the poverty vulnerability of farm households in the eastern region slightly more than in the central and western regions. In the eastern region, the implementation of inclusive finance reduced poverty vulnerability by about 8%; in the central region, it reduced poverty vulnerability by about 6.6%, and in the western region, it reduced poverty vulnerability by about 6.1%. Based on this, this study proposes appropriate policy recommendations to improve the level of financial development in poor areas and reduce the vulnerability of farm households to poverty, thereby promoting rural development.

Keywords: Poverty; Inclusive Finance; Poverty Vulnerability; China