Paper short abstract:

Authors of this paper: Quanda Zhang, Alberto Posso In this paper, we first construct a new indicator for financial inclusion. We then examine the effect of financial inclusion on household income. We find that financial inclusion has a strong positive effect on household income.

Paper long abstract:

Authors of this paper: Quanda Zhang, Alberto Posso

Using national representative household finance survey data covering more than 6200 Chinese households, we first construct a new multidimensional indicator for financial inclusion. Then we examine the effect of financial inclusion on household income. Our results elicit several findings. First, financial inclusion has a strong positive effect on household income. This effect can be found across all households with different levels of income. Second, low-income households are found to benefit more from financial inclusion than high and mid-level income ones. We argue that, in this sense, financial inclusion helps reduce income inequality.