Can Digitalization Foster Sustainable Financial Inclusion? Opportunities for Both Banks and Vulnerable Groups
Abstract
:1. Introduction
2. Theoretical Framework
2.1. Digital Innovation and Spillover
2.2. Long-Tail Market and Expanding the Business Probability Frontier
2.3. Making Better Portfolio Decisions
2.4. “Triple-Win” Sustainability
3. Data and Methodology
3.1. Data Source
3.2. Basic Model
3.3. Profit-Driven and Risk Aversion Mechanism Model
3.4. Variables
3.4.1. Dependent Variable
3.4.2. Independent Variable
3.4.3. Mediator Variable
3.4.4. Control Variable
3.4.5. Instrument Variable
4. Empirical Results and Discussion
4.1. The Results of the Basic Model
4.2. The Results of the Profit-Driven and Risk Aversion Mechanism Model
4.3. Robustness Test and Endogeneity
4.4. Discussion
5. Conclusions
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Appendix B
Variable | Definition | Obs | Mean | Std. Dev. | Min | Max |
---|---|---|---|---|---|---|
cinclusion | Bank unsecured loans to total gross loans (%) | 348 | 16.24 | 10.87 | 1.04 | 51.19 |
roa | Average return on total assets (%) | 334 | 0.84 | 0.24 | −0.59 | 1.81 |
npl | Non-performance loans ratio(%) | 347 | 1.55 | 0.55 | 0.30 | 7.70 |
size | Natural logarithm of total assets of the bank | 348 | 3.93 | 0.68 | 2.50 | 5.52 |
Mediation Effect Panel Model | |||||
---|---|---|---|---|---|
(i) roa | (ii) roa | (iii) npl | (iv) npl | (v) npl | |
roa(−1) | −0.00495 (0.0694) | ||||
npl(−1) | −0.322 *** (0.0957) | −1.740 *** (0.1959) | |||
cinclusion | 0.00688 ** (0.0032) | −0.000754 (0.0052) | −0.00948 (0.0080) | −0.0109 (0.0184) | 0.0133 (0.0259) |
cinclusion(−1) | −0.00613 (0.0053) | 0.00953 (0.0190) | 0.00249 (0.0220) | ||
cinclusion(−2) | 0.0155 *** (0.0053) | 0.0129 (0.0186) | 0.00673 (0.0236) | ||
cinclusion(−3) | −0.00799 (0.0057) | −0.0379 * (0.0197) | −0.0549 ** (0.0255) | ||
cinclusion(−4) | 0.0311 (0.0245) | ||||
size | −0.689 ** (0.3122) | 0.416 (0.5912) | 0.333 (0.6960) | −1.479 (2.1591) | −1.161 (2.8527) |
cons | 3.537 *** (1.1925) | −0.853 (2.3172) | 0.303 (2.6426) | 8.259 (8.5813) | 9.037 (11.5151) |
bank | yes | yes | yes | yes | yes |
year | yes | yes | yes | yes | yes |
N | 334 | 172 | 347 | 174 | 116 |
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Variable | Definition | Obs | Mean | Std. Dev. | Min | Max |
---|---|---|---|---|---|---|
cinclusion | Bank unsecured loans to total gross loans (%) | 348 | 16.24 | 10.87 | 1.04 | 51.19 |
lncred | Logarithm of unsecured loans of the bank | 348 | 6.14 | 2.33 | 1.49 | 11.04 |
digit | The years of using Mobile Banking Service | 348 | 5.54 | 2.41 | 0 | 12 |
lndi | Natural logarithm of Peking University Digital Financial Inclusion Index | 348 | 5.70 | 0.20 | 5.26 | 6.07 |
roa | Average return on total assets (%) | 334 | 0.84 | 0.24 | −0.59 | 1.81 |
frontier | Deposit loan ratio (%) | 348 | 71.88 | 15.12 | 38.97 | 123.42 |
diversity | The reciprocal of HHI index | 346 | 3.07 | 0.42 | 1.88 | 4.30 |
cti | Cost-to-income ratio (%) | 348 | 30.45 | 6.42 | 14.83 | 66.47 |
size | Logarithm of total assets of the bank | 348 | 3.93 | 0.68 | 2.50 | 5.52 |
cp | Type by bank attribute (1 = large commercial banks, 2 = joint-stock banks, 3 = city commercial banks, 4 = rural commercial banks) | 348 | 2.79 | 0.86 | 1 | 4 |
inf | Inflation growth rate (%) | 348 | 2.08 | 0.51 | 1.4 | 2.9 |
Fixed Effects Models | ||||
---|---|---|---|---|
(1) Cinclusion | (2) Cinclusion | (3) Lncred | (4) Lncred | |
digit | 1.716 *** (0.2780) | 1.907 *** (0.5559) | 0.143 *** (0.0267) | 0.324 *** (0.0466) |
cti | −0.0467 (0.0759) | −0.0526 (0.0775) | 0.00551 (0.0063) | −0.000292 (0.0062) |
roa | 2.052 * (1.1749) | 2.100 * (1.1830) | −0.0670 (0.0959) | −0.0220 (0.0930) |
size | 0.788 (5.6482) | −0.138 (6.1185) | 3.459 *** (0.4617) | 2.597 *** (0.4818) |
digit_digit | −0.0131 (0.0331) | −0.0121 *** (0.0026) | ||
inf | −0.0404 (0.0539) | −0.0566 (0.0521) | ||
cons | 3.516 (21.6747) | 6.732 (23.1667) | −8.258 *** (1.7758) | −5.243 *** (1.8295) |
axis of symmetry (=12) | 72.786 | 13.39 *** | ||
N | 334 | 334 | 334 | 334 |
Fixed Effects Models | ||||
---|---|---|---|---|
(5) Cinclusion | (6) Cinclusion | (7) Lncred | (8) Lncred | |
i.cp_digit | ||||
1 | 0.954 *** (0.3620) | 0.0505 (0.0319) | ||
2 | 2.232 *** (0.3206) | 0.143 *** (0.0289) | ||
3 | 2.583 *** (0.3231) | 0.234 *** (0.0292) | ||
4 | 1.224 *** (0.3375) | 0.191 *** (0.0302) | ||
digit | 1.375 *** (0.2063) | 0.124 *** (0.0212) | ||
cti | −0.0373 (0.0716) | 0.105 (0.0669) | 0.00555 (0.0058) | 0.00855 (0.0054) |
roa | 2.961 *** (1.1250) | 3.437 ** (1.6815) | 0.00118 (0.0905) | 0.166 (0.1371) |
size | −5.369 (5.5626) | 6.860 *** (1.3770) | 2.599 *** (0.4481) | 2.909 *** (0.1128) |
inf | −0.0458 (0.0501) | 0.102 (0.0785) | ||
i.cp | ||||
2 | 3.844 ** (1.6750) | 0.332 ** (0.1359) | ||
3 | −0.716 (2.3743) | 0.145 (0.2001) | ||
4 | −4.170 (2.7873) | −0.00734 (0.2105) | ||
cons | 24.94 (21.2551) | −23.85 *** (7.8984) | −5.109 *** (1.7161) | −6.656 *** (0.6617) |
fixed effects | individual | bank type | individual | bank type |
N | 334 | 334 | 334 | 334 |
Mediation Effect Panel Model | ||||||
---|---|---|---|---|---|---|
(9) Frontier | (10) Cinclusion | (11) Lncred | (12) Diversity | (13) Cinclusion | (14) Lncred | |
digit | 4.226 *** (0.2145) | 1.418 *** (0.3194) | 0.103 *** (0.0287) | 0.0325 *** (0.0076) | 1.880 *** (0.2801) | 0.162 *** (0.0262) |
cti | −0.0496 (0.0756) | 0.00479 (0.0062) | −0.00608 (0.0765) | 0.0105 * (0.0062) | ||
roa | 2.748 ** (1.2272) | 0.0340 (0.0989) | 2.397 ** (1.1676) | −0.0244 (0.0932) | ||
size | 2.676 (5.7121) | 3.726 *** (0.4601) | −3.475 (5.7496) | 2.937 *** (0.4593) | ||
inf | −0.0560 (0.0531) | −0.0392 (0.0524) | ||||
frontier | 0.0595 * (0.0318) | 0.00862 *** (0.0026) | ||||
diversity | 2.630 *** (0.9310) | 0.323 *** (0.0743) | ||||
cons | 48.48 *** (1.2429) | −7.073 (22.3045) | −9.750 *** (1.7990) | 2.893 *** (0.0438) | 9.742 (21.4894) | −7.494 *** (1.7209) |
N | 348 | 334 | 334 | 346 | 332 | 332 |
Fixed Effects Models | ||||||
---|---|---|---|---|---|---|
(15) Cinclusion | (16) Cinclusion | (17) Cinclusion | (18) Lncred | (19) Lncred | (20) Lncred | |
lndi | 17.76 *** (2.6401) | 62.03 *** (17.9383) | 209.0 *** (69.4534) | 4.746 *** (1.4681) | 1.453 *** (0.2322) | 21.54 *** (4.8435) |
cti | −0.0617 (0.0751) | −0.0895 (0.0788) | −0.104 (0.0785) | 0.00740 (0.0064) | 0.00494 (0.0062) | 0.00104 (0.0061) |
roa | 1.533 (1.1583) | 0.431 (1.2338) | 1.179 (1.2718) | −0.178 * (0.1010) | −0.108 (0.0941) | −0.0330 (0.0931) |
size | 0.6327 (5.2929) | −10.17 (6.3540) | −13.94 ** (6.5397) | 3.057 *** (0.5200) | 3.340 *** (0.4330) | 2.931 *** (0.4320) |
lndi_lndi | −13.11 ** (5.9881) | −1.754 *** (0.4224) | ||||
inf | −0.00669 (0.0488) | 0.0367 (0.0486) | ||||
cons | −86.8 *** (12.2482) | −286.7 *** (92.0512) | −684.1 *** (203.2965) | −32.26 *** (7.5335) | −15.31 *** (1.1554) | −71.19 *** (13.5071) |
axis of symmetry(=6.07) | 7.971 | 6.140 | ||||
bank | yes | yes | yes | yes | yes | yes |
year | no | yes | yes | yes | no | no |
N | 334 | 334 | 334 | 334 | 334 | 334 |
Fixed Effects Models | ||||||
---|---|---|---|---|---|---|
(21) Cinclusion | (22) Cinclusion | (23) Cinclusion | (24) Lncred | (25) Lncred | (26) Lncred | |
i.cp_lndi | ||||||
1 | 46.75 *** (17.6806) | 9.497 ** (3.7348) | 2.763 * (1.4420) | 0.371 (0.3128) | ||
2 | 59.24 *** (16.9565) | 22.77 *** (3.1114) | 3.651 *** (1.3830) | 1.330 *** (0.2639) | ||
3 | 63.64 *** (17.0344) | 25.35 *** (3.0721) | 4.627 *** (1.3893) | 2.239 *** (0.2571) | ||
4 | 48.55 *** (16.9962) | 11.40 *** (3.2585) | 4.127 *** (1.3862) | 1.779 *** (0.2731) | ||
lndi | 16.88 *** (5.0877) | 1.243 *** (0.4072) | ||||
cti | −0.100 (0.0739) | −0.0609 (0.0710) | 0.0708 (0.0676) | 0.00577 (0.0060) | 0.00510 (0.0058) | 0.00541 (0.0054) |
roa | 1.354 (1.1652) | 2.189 ** (1.1048) | 3.689 ** (1.7441) | −0.106 (0.0950) | −0.0605 (0.0886) | 0.219 (0.1396) |
size | −17.82 *** (6.2604) | −3.891 (5.1791) | 7.761 *** (1.3661) | 2.067 *** (0.5106) | 2.615 *** (0.4190) | 3.000 *** (0.1093) |
inf | 0.0134 (0.0456) | |||||
i.cp | ||||||
2 | 4.411 *** (1.6908) | 0.408 *** (0.1353) | ||||
3 | 0.000494 (2.4401) | 0.122 (0.1953) | ||||
4 | −4.405 (2.8290) | −0.171 (0.2264) | ||||
cons | −235.9 *** (87.7361) | −84.31 *** (11.6583) | −115.5 *** (27.8245) | −25.18 *** (7.1557) | −14.33 *** (1.0872) | −13.29 *** (2.2270) |
bank type | no | no | yes | no | no | yes |
bank | yes | yes | no | yes | yes | no |
year | yes | no | yes | yes | no | yes |
N | 334 | 334 | 334 | 334 | 334 | 334 |
Mediation Effect Panel Model | ||||||
---|---|---|---|---|---|---|
(27) Frontier | (28) Cinclusion | (29) Lncred | (30) Diversity | (31) Cinclusion | (32) Lncred | |
lndi | 42.85 *** (2.2448) | 68.26 *** (17.8967) | 1.146 *** (0.2498) | 0.335 *** (0.0780) | 57.84 *** (17.8312) | 1.591 *** (0.2262) |
cti | −0.103 (0.0781) | 0.00432 (0.0061) | −0.0523 (0.0794) | 0.0100 (0.0061) | ||
roa | 1.236 (1.2576) | −0.00726 (0.0983) | 0.848 (1.2318) | −0.0702 (0.0913) | ||
size | −9.434 (6.2902) | 3.538 *** (0.4314) | −13.42 ** (6.3973) | 2.889 *** (0.4291) | ||
inf | −0.0331 (0.0489) | 0.0461 (0.0474) | ||||
frontier | 0.0847 *** (0.0320) | 0.00773 *** (0.0025) | ||||
diversity | 2.416 *** (0.9144) | 0.321 *** (0.0728) | ||||
cons | 172.4 *** (12.8011) | −329.4 *** (92.4612) | −14.91 *** (1.1455) | 1.162 *** (0.4449) | −260.2 *** (91.6680) | −15.51 *** (1.1155) |
bank | yes | yes | yes | yes | yes | yes |
year | no | yes | no | no | yes | no |
N | 348 | 334 | 334 | 346 | 332 | 332 |
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Chu, Y.; Ye, S.; Li, H.; Strauss, J.; Zhao, C. Can Digitalization Foster Sustainable Financial Inclusion? Opportunities for Both Banks and Vulnerable Groups. Sustainability 2023, 15, 6727. https://doi.org/10.3390/su15086727
Chu Y, Ye S, Li H, Strauss J, Zhao C. Can Digitalization Foster Sustainable Financial Inclusion? Opportunities for Both Banks and Vulnerable Groups. Sustainability. 2023; 15(8):6727. https://doi.org/10.3390/su15086727
Chicago/Turabian StyleChu, Ying, Shujun Ye, Hongchang Li, Jack Strauss, and Chen Zhao. 2023. "Can Digitalization Foster Sustainable Financial Inclusion? Opportunities for Both Banks and Vulnerable Groups" Sustainability 15, no. 8: 6727. https://doi.org/10.3390/su15086727