Digital Finance and Consumption Upgrading: A Study on the Impact Differences between Urban and Rural Residents

With the advent of the digital era, digital finance has become a significant driving force behind the transformation of the global consumption structure. This paper uses a panel data model to analyze how digital finance affects the consumption upgrading of urban and rural residents, revealing its complex impact on both promoting and inhibiting consumption upgrading. The empirical results show that digital finance significantly promotes developmental consumption among rural residents, such as investment in education and health, but has a negative impact on survival consumption, indicating that digital financial resources tend to be used for long-term investments rather than immediate consumption needs. In urban areas, digital finance slightly but significantly promotes the combination of developmental and hedonic consumption, while its impact on survival consumption is not significant, demonstrating its potential in driving high-end consumption. Under the differential impacts in various socioeconomic contexts, the development of digital finance exhibits dual effects.