Best Path for Governments to Improve Internet Financial Inclusion in China’s Rural Areas: Based on the “Thousand Village Investigation” of SUFE in 2017

Su Fang; Zou Yige; Han Dongmei

doi:doi:10.16538/j.cnki.jfe.2020.01.001

Summary

In 2017, the " Thousand Village Investigation” of Shanghai University of Finance and Economics conducted an in-depth investigation and analysis on the use of Internet finance in rural areas. Based on the preliminary results of the investigation and analysis, this paper focuses on government behavior and puts forward hypotheses from the demand side of Internet finance. We suppose that, although government behavior has an impact on the level of rural Internet financial inclusion, it does not have a direct impact, but indirectly plays a role by influencing the Internet habits of peasants.　　In the empirical analysis of data, firstly, a three indexes system, i.e. the degree of penetration, usage and effectiveness of the imagery for Internet finance inclusion, is set up to measure the level of Internet finance inclusion （IFI）. The Internet habits of peasants （Ind） are measured by four indexes and government behavior （Gov） is measured by six indexes. The entropy evaluation method is used to get the weight of each index and measure the three kernel variables finally. The OLS regression model is used to the initial analysis, in which, the explained variable is IFI, and explanatory variables are Ind and Gov. The regression results show that Ind and Gov affect IFI positively. The Structural Equation Model （SEM） is used in the path analysis among three variables. The SEM results show that the direct effect from Gov to IFI is not significant, while it is significant between Gov to Ind and Ind to IFI. That means the effect from Gov to IFI is indirect and through the middle variable of Ind. Path analysis is continued deeply based on the secondary level of indexes, in order to get the best detailed path to improve the development of Internet financial inclusion by governments. In detail, governments should improve the equipment of Internet, adopt more Internet publicity methods, and provide more Internet channels to supervise the work of governments, so as to affect the Internet life habits of peasants, and make them gradually accustomed to the Internet life mode and improve the Internet financial inclusion. This is the three most efficient hands of governments in the process of precisely being committed to the development of rural Internet financial inclusion.　　In conclusion, we suggest that governments should realize their role clearly in the process of improving the Internet finance inclusion. Supply side and demand side are the main two parties of the Internet financial market. Governments are only the third party outside of the market, which has an indirect effect instead of promoting the supply or demand directly. Everything is nothing if any government is going to intervene the supply or demand of the Internet finance market directly in rural areas. Actually, governments should do harder to train peasants having an Internet life habit. Only when peasants naturally get used to the Internet life and cannot live without Internet, would the Internet finance inclusion in rural areas develop well automatically.