Can Digital Finance Narrow Regional Economic Disparities? Evidence From Urban Agglomerations in China

ABSTRACT With the continuous acceleration of economic development, the problem of regional economic imbalance has become increasingly prominent. From the perspective of core–periphery, this study examines the impact of digital finance on the economic disparities between cities and tests the mediating effect of factor mobility. The results show that digital finance is conducive to narrowing the economic disparities between central cities and peripheral cities. Factor mobility is the primary mechanism. Digital finance can reduce urban economic disparities by facilitating the flow of capital factors. Heterogeneity analysis shows that the role of digital finance is more significant in the eastern and central regions. Among the three sub‐indicators of digital finance, both the coverage breadth and the digitization are conducive to narrowing urban economic disparities. Therefore, the construction of digital financial infrastructure should be strengthened to increase the coverage breadth of digital finance so that a broader range of regions and groups can enjoy the digital dividend and promote coordinated regional development.