An analysis of the synergistic poverty reduction effectiveness of fiscal spending and digital inclusive finance from the standpoint of relative poverty was conducted

Abstract

This paper conducts an empirical investigation into the synergistic effects of fiscal spending and digital inclusive finance on poverty reduction. These two elements are noted as crucial linkages in the struggle against poverty. This paper employs the DEA-Malmquist index model and Tobit model analysis to assess the effectiveness of fiscal expenditure and digital inclusive finance synergy under relative poverty and the influencing factors in the central and western provinces of China using provincial panel data from 2014 to 2020. The study found that: first, the integrated effectiveness of fiscal spending and digital financial inclusion to reduce poverty is firstly higher than it is for fiscal spending alone; second, additional fiscal spending and technology for digital financial inclusion should be allocated to the central and western areas in particular; and third, for poverty reduction in central and western China, the level of financial development, financial payment capability, and industrial structure are the most crucial factors. The following recommendations are made based on the findings of the aforementioned research: overcoming the geographical restrictions; we will improve the transfer payment system’s top-level architecture for places with extreme poverty; the design of transfer payments to communities with extreme poverty will be improved; increasing access to digital financial services; we’ll boost technical and scientific innovation in underdeveloped areas; compensate for the lack of knowledge in underdeveloped areas; we will advance digital financial inclusion’s science, technology, and accuracy to lessen poverty; the combination of fiscal and financial policies should be put into practice in accordance with the level of poverty and the state of poverty in the places that are affected by it.