Digital Financial Inclusion and Sustainable Local Development in China

Digital financial inclusion (DFI) may ease county-level financing frictions, but its relationship with multidimensional sustainable local development (SLD) remains uncertain. Using 2016–2023 data for 2628 Chinese county-level units, we construct an SLD index covering economic vitality, industrial capacity, public-service capacity, and environmental quality, with entropy weights within dimensions and equal weights across dimensions. County and year fixed-effects estimates reveal a positive DFI–SLD association, which weakens substantially when county and province–year fixed effects are absorbed. DFI is positively associated with economic vitality, industrial capacity, and environmental quality, but not significantly with public-service capacity. The environmental association mainly reflects lower PM2.5 concentrations; CO2 emission intensity shows no significant association. All three DFI components are significantly positive in separate regressions; jointly, depth of use and digitalization remain significantly positive, while breadth of coverage shows a marginally significant positive association. Indirect associations involving outstanding loans and industrial-enterprise counts are significant but modest. The association is stronger with greater capital formation and export scale but weaker with export dependence. Fully interacted tests identify significant differences across the Hu Huanyong Line, but not among eastern, central, and western regions.