What is the role of digital divide between digital inclusive finance and common prosperity? Evidence from 245 cities in China

Abstract The growing popularity of digital inclusive finance and the reduction of financial resource inequality are both benefits of digitization in the financial services sector; however, the uneven regional differences in the development of digital technologies have led to a digital divide, and exploring how this divide impacts the effect of digital inclusive finance on the promotion of common prosperity is highly practical. Drawing on panel data spanning 245 Chinese cities between 2012 and 2022, we constructed an economic distance matrix and explored the digital inclusive finance tool for promoting common prosperity via a spatial econometric model. The outcomes demonstrate that the advancement of common prosperity is greatly aided by digital inclusive finance, and the positive spatial spillovers are obvious. These results remain robust after substituting variables and removing a few examples. The connection between digital financial inclusion and shared prosperity is significantly influenced by the digital divide. There is a notable moderating influence of the digital gap on the link between common prosperity and digital inclusive finance. In terms of dimensional heterogeneity, breadth of coverage, depth of use, and digitization all contribute to shared prosperity. From the perspective of regional heterogeneity, the digital inclusive finance in the eastern region exerts a stronger effect on common prosperity than that in the central and western regions. Further improvements should be made to the building of digital infrastructure, the use of digital technology should be further increased, and the cultural literacy of residents should be further enhanced to encourage the prosperity of all people in common.