The Impact of Digital Financial Inclusion on Agricultural Mechanization: Evidence from 1,869 Counties in China

Abstract

In light of China’s generally backward agricultural mechanization levels, it becomes crucial to shore up this weak link with endogenous driving force. The digital financial inclusion offers a approach to addressing the challenges related to agricultural mechanization. This study, collecting data from 1,869 counties and using the Spatial Autoregressive Model with Spatial Autoregressive Disturbances (SARAR model), analyzes the equilibrium and disequilibrium effects of digital financial inclusion on agricultural mechanization, as well as the mechanisms through which digital financial inclusion operates. The findings indicate that both digital financial inclusion and agricultural mechanization exhibit spatial spillover effects. The development of digital financial inclusion emerges as a significant driver for promoting agricultural mechanization. Furthermore, the impact of digital financial inclusion on agricultural mechanization varies based on the level of agricultural economic development, with counties characterized by less developed agriculture, plain topography, and strong agricultural sectors benefiting more from digital financial inclusion. Additionally, digital financial inclusion indirectly boosts agricultural mechanization by increasing farmers’ income and encouraging investment in fixed assets. Therefore, it is crucial to harness the benefits brought by the development of digital financial inclusion while promoting agricultural mechanization, and regions should tailor their approaches to promote digital financial inclusion development according to their local conditions.

Key words： digital financial inclusion; agricultural mechanization; county; SARAR model