Can household inclusive finance alleviate the relative poverty of rural residents? Evidence from static and dynamic perspectives

Effectively addressing the current forms of relative poverty and preventing future household poverty are essential for the long-term success of global poverty reduction efforts. Using microdata from the China Household Finance Survey (CHFS), this study adopts an integrated analytical framework that examines relative poverty from static and dynamic perspectives. Using Probit estimation and Propensity Score Matching (PSM), the study empirically analyzes the impact and heterogeneity of household inclusive finance on rural relative poverty. First, household inclusive finance significantly reduces both static and dynamic relative poverty among rural residents, with a more pronounced effect on the dynamic dimension. Second, its poverty-reduction effects exhibit considerable heterogeneity, varying significantly across regions, the age of the household head, family structure, and levels of debt. Third, inclusive finance alleviates poverty by fostering the accumulation of livelihood capital and promoting the diversification of livelihood strategies. These findings provide valuable insights for the design of future poverty alleviation strategies. Strengthening the effectiveness of inclusive finance, addressing its current limitations, implementing tailored policies, and enhancing its linkage with household livelihoods are crucial for improving poverty-targeted financial strategies. The findings contribute to ensuring the long-term sustainability of global poverty alleviation efforts.