How can digital financial inclusion promote sustainable rural industrial development? Evidence from China and threshold conditions

Abstract

Advancing sustainable rural industrial development is a core component of rural revitalization. However, the pathways through which digital financial inclusion (DFI) promotes sustainable rural industrial development, and the conditions governing these effects, remain insufficiently understood. Using data from Chinese provinces from 2011 to 2022, this study calculated the degree of sustainable rural industrial development and its spatio-temporal evolution. Mediation analysis and panel threshold models were employed to investigate the transmission mechanisms and critical thresholds through which digital financial inclusion affects sustainable rural industrial development. The findings indicate that while sustainable rural industrial development is rising, it remains relatively low, with the primary disparities stemming mainly from regional differences; the “long-tail effect,” “catfish effect,” and “information effect” of digital financial inclusion can effectively promote sustainable rural industrial development, with more pronounced benefits in terms of rural industrial modernization and in main grain-consuming areas; agricultural technology innovation (ATI) plays a mediating role. The mediating effect accounts for 38% of the total effect; and how digital financial inclusion and sustainable rural industrial development are linked is also affected by external effects from the new rural collective economy. When the level of the new rural collective economy exceeds a certain threshold, the promoting effect of digital financial inclusion on sustainable rural industrial development can be fully manifested. These findings offer theoretical and practical support for China’s implementation of the rural revitalization strategy and highlight the institutional preconditions under which digital financial inclusion can effectively empower sustainable rural industrial development.