How Does Digital Financial Inclusion Affect Rural Land Transfer? Evidence from China

Farmers’ land transfer practices optimize the allocation of agricultural resources by transferring them to more efficient operators. This enhances agricultural productivity and advances rural revitalization. However, due to the lack of financial institution outlets in rural areas, the availability of financial services in rural areas is limited, which in turn hinders the transfer of rural land. This study examines the impact of digital financial inclusion, characterized by the deep integration of internet technology and financial services, on farmers’ land transfer behavior in China. The study uses data from the China Family Panel Studies (2012–2022) and provincial digital financial inclusion data. The results show that digital financial inclusion significantly promotes rural land transfer-out. The mechanisms reveal two pathways: (1) digital financial inclusion expands non-agricultural entrepreneurship by easing credit constraints and reducing reliance on land livelihoods; (2) it increases participation in commercial insurance, mitigating risks of land abandonment. Heterogeneity analysis reveals stronger effects in eastern China and among educated households. Theoretically, the study identifies the dual role of financial technology in reshaping rural land markets through credit access and risk management. Practically, it reveals how DFI influences land transfer behavior, providing a basis for the government to formulate policies that combine the two, ultimately enhancing the production capacity, operational efficiency, and market competitiveness of smallholder farmers. The findings offer global insights for developing countries that are leveraging digital finance to activate rural land markets and achieve digital financial inclusion.