The impact and moderating mechanisms of digital inclusive finance on public services in Chinese counties
Public services are critical for ensuring social welfare and equity while supporting national economic and social development. As providers of public services, governments at all levels are tasked with delivering high-quality services to meet the needs of residents. In recent years, China has achieved significant progress in public service provision, including steady increases in education funding and improved healthcare conditions. However, challenges remain, such as uneven service quality, excessive focus on infrastructure over livelihood services, and disparities in service provision due to regional economic and fiscal constraints.
The Role of Digital Inclusive Finance
Digital inclusive finance, as a key component of the digital economy, is progressively integrating into various levels of public services. This is especially evident at the county level, where digital inclusive finance shows immense potential. First, digital inclusive finance can reduce the cost and entry barriers associated with providing financial services during public service investment or financing processes through digital means. This is particularly beneficial in remote areas such as counties and rural regions beyond urban centers.
Research Methodology and Data Selection
This article selects data from 1445 counties across three regions of China (Eastern, Central, and Western) between 2008 and 2022. It constructs evaluation index systems for the quality of livelihood and infrastructure public services and uses the entropy weight method to measure and analyze the spatiotemporal evolution characteristics of these two types of public services. The article employs a Spatial Durbin Model with two-way fixed effects to explore the spatial spillover effects and moderating mechanisms of the digital inclusive finance on the quality of livelihood and infrastructure public services in Chinese counties, while also analyzing the regional heterogeneity of the digital inclusive finance’s impact across the Eastern, Central, and Western regions.
Impact on Public Service Quality
The results show that the digital inclusive finance significantly improves the quality of both livelihood and infrastructure public services in Chinese counties, with a more pronounced positive effect on livelihood services. Research findings regarding spatial effects include:
- In the counties of Western and Eastern China, the digital inclusive finance exhibits a significant positive spatial spillover effect on livelihood public services.
- For infrastructure public services, a significant positive spatial spillover effect is observed in Western counties.
- The spillover effect is significantly negative in other regions for infrastructure public services.
Moderating Mechanisms of County Development
The development of the primary industry in counties enhances the digital inclusive finance’s positive impact on infrastructure services and strengthens its spillover effect on livelihood services in neighboring counties. Additionally, the role of local fiscal revenue is significant:
- An increase in local fiscal revenue boosts the digital inclusive finance’s positive impact on both livelihood and infrastructure services within the county.
- An increase in local fiscal revenue suppresses its spillover effect on livelihood services in neighboring counties.
This article provides empirical evidence from a Chinese perspective on the regional impact of the digital inclusive finance on public services. The "14th Five-Year Plan" emphasizes the need to enhance public service quality, innovate service delivery, and strengthen policy guarantees, highlighting the urgency of improving public services to advance the modernization of national governance.
