Using digital technology to improve financial inclusion in China

We investigate the channels through which financial inclusion can be achieved in China. The Partial Least Squares approach to Structural Equation Modelling is used to analyse the relationships among financial literacy, Internet usage, digital financial products usage, and financial inclusion. We show that Internet usage has no direct impact on financial inclusion. Rather, the direct impact comes from the level of financial literacy and the use of digital financial products, which are advanced by popularity of the Internet. Internet usage and digital financial products usage play a multiple mediation role between financial literacy and financial inclusion. We conclude that to achieve the goal of advancing financial inclusion, Chinese policymakers should improve the consumers’ financial literacy and promote the use of digital financial products.