The Impact of Digital Inclusive Finance on Agricultural and Rural Modernization: Spatial Spillover and Threshold Analysis

Abstract

In developing countries, agriculture underpins sustainable rural transformation. Using a provincial panel for China covering 2014 to 2023, this study investigates the role of digital inclusive finance in advancing agricultural and rural modernization. The empirical results indicate that digital inclusive finance significantly promotes agricultural and rural modernization. This effect is more evident in major grain-producing areas and in provinces characterized by a relatively high degree of population aging. However, its spillover effects are asymmetric. While digital inclusive finance promotes local agricultural and rural modernization, it generates negative cross-regional spillover effects. Moreover, traditional financial coverage exhibits a nonlinear moderating effect, with the complementary role of digital and traditional finance becoming evident only after traditional financial coverage exceeds a single threshold. These findings highlight the importance of coordinating digital and traditional financial services and accounting for regional differences and spatial spillovers when promoting agricultural and rural modernization. They provide useful implications for developing countries seeking to strengthen inclusive financial systems and support sustainable rural transformation.