Impact and Mechanisms of Digital Inclusive Finance in Relation to Farmland Transfer: Evidence from China

Abstract

Land use efficiency is primarily limited by the fragmentation of land management. China’s fragmented farmland poses a significant threat to the country’s food security and rural revitalization. Therefore, promoting land transfer to establish large-scale operations is a significant solution. With digital technology’s advancements, digital inclusive finance (DIF) has permeated rural regions to provide financial assistance for farmers’ livelihood and rural development. However, it remains unclear if and how DIF can incentivize land transfer. Therefore, this paper aims to establish an econometric model to analyze the impact of digital inclusive finance on land transfer. Additionally, a chain mediation effect model is established to analyze how DIF affects land transfer through an exploration of the mechanisms of farmers’ livelihood capital and the use of digital information. Therefore, the findings from the analysis of data from 3165 farmers demonstrate that DIF has the potential to notably facilitate land transfer and work through the chain mediation channel. Moreover, the impact of DIF on land transfer is even more pronounced in economically developed regions. Consequently, this paper’s results hold the potential to inform policy making by offering insight into three viable paths—digital inclusive financial support, livelihood capital, and digital information—as means to promote land transfer.