The Impact of Digital Inclusive Finance on the Urban-Rural Income Gap in Jiangsu Province

Abstract

: The urban-rural income gap is a key issue constraining the realization of common prosperity. Taking Jiangsu Province as the research object, this study uses panel data from 13 prefecture-level cities in the province from 2014 to 2023 to examine the impact of digital financial inclusion on the urban-rural income gap and its regional heterogeneity. The findings show that digital financial inclusion significantly narrows the urban-rural income gap in Jiangsu Province, a conclusion that remains robust after endogeneity and robustness tests. In terms of regional heterogeneity, the gap-narrowing effect of digital financial inclusion exhibits significant spatial differentiation: Southern Jiangsu benefits the most, due to its well-developed digital infrastructure and high level of financial penetration; Northern Jiangsu also shows a steady narrowing effect, indicating that digital finance can benefit economically weaker areas by lowering service thresholds; notably, in Central Jiangsu, digital financial inclusion widens the urban-rural income gap, reflecting a “siphon effect” where digital financial resources over-concentrate in urban superior industries, resulting in insufficient inclusive coverage of rural areas. Based on these findings, this paper proposes three policy recommendations: first, strengthen digital financial infrastructure in rural areas of Central and Northern Jiangsu to improve service accessibility; second, innovate differentiated financial products and implement precise policies tailored to the three major regions; third, improve collaborative development mechanisms, optimize the business environment, and establish regional coordination mechanisms to promote the flow of digital financial resources to rural and less-developed areas. This study provides empirical evidence and policy references for Jiangsu Province and similar developed provinces to formulate differentiated digital financial inclusion policies, narrow the urban-rural income gap, and promote common prosperity.