Inclusive finance and urban household consumption: Evidence from a Quasi-natural Experiment in China

Since the introduction of inclusive finance in 2005, traditional financial systems have progressively reduced financial exclusion, allowing disadvantaged groups access to financial services, thereby fostering economic growth and income equality. This study analyzes Chinese prefecture-level cities’ data spanning 2003–2020 from, using a difference-in-differences approach to evaluate the impact of inclusive finance policies on urban household consumption. Results indicate that inclusive finance policies significantly increase urban household consumption levels by raising per capita disposable income and alleviating financing constraints. In addition, the positive impact of inclusive finance policies on household consumption is more pronounced in cities with higher levels of infrastructure development.