Inclusive financial development and common prosperity: An empirical analysis using individual-level data

Abstract

The relationship between inclusive finance development (IFD) and common prosperity (CP) in China is examined in this study using data from the China Family Panel Studies (CFPS), which were carried out in 2014, 2016, 2018, and 2020. The study reveals a positive association between IFD and CP at the individual level, supporting the hypothesis that IFD facilitates the attainment of CP by easing credit constraints, advancing the third distribution, and reducing information asymmetry. It further observes temporal and regional variations in the IFD-CP relationship, noting a pronounced promotional impact in economically prosperous areas. This study contributes to the literature by employing a novel individual-level dataset and investigating three distinct influencing channels.