A1118
Title: Does digital finance upgrade trickle-down consumption effect in China?
Authors: Ying Tao - Sun Yat-sen University (China) [presenting]
Abstract: The trickle-down consumption and moderating effects of digital finance in China are investigated. Three realistic patterns motivate this study; trickle-down consumption has been confirmed in many developed countries, digital finance facilitates household consumption, and China exhibits income inequality across regions. Using data from the 2017 and 2019 China Household Finance Survey, it is found that Chinese households exhibit trickle-down consumption behaviour and that digital finance development moderates trickle-down consumption; this moderating effect is somewhat heterogeneous by year, geographic location, hukou, and household income. The mechanism analysis results confirm that the relaxation of liquidity constraints is the primary channel through which the positive moderating effect operates. The findings are robust to various tests, and alternative specifications are also discussed. Some policies are suggested to alleviate consumption inequality by developing digital finance and stimulating a natural pattern of trickle-down consumption in China.
