Digital Financial Inclusion and Economic Growth: Multi-Dimensional Evidence from Coverage, Depth, and Digitisation

Using panel data from 278 Chinese prefecture-level cities during 2011–2019, this study employs two-way fixed effects and instrumental variable (2SLS) models to investigate how the distinct dimensions of digital financial inclusion (DFI)—coverage breadth, usage depth, and digitisation level—affect urban economic growth. The results reveal substantial heterogeneity across these DFI dimensions. The expansion of coverage breadth significantly and robustly promotes city-level economic growth. In contrast, greater usage depth exerts a negative effect, possibly due to regulatory lags in internet credit and insurance that intensify financial risks. The digitisation level shows a positive but statistically insignificant impact, indicating that digital infrastructure has not yet been fully transformed into growth-enhancing productivity. Furthermore, the regional heterogeneity analysis reveals a stark divergence: DFI acts as a crucial growth engine in the financially underserved central and western regions, whereas excessive financialisation has exerted a crowding-out effect in eastern cities. These findings suggest that policy efforts should prioritise broadening DFI coverage while strengthening the regulation of usage-related activities, thereby balancing financial innovation with systemic stability.