Assessing the Influence of Digital Inclusive Finance on Household Financial Vulnerability in China: Insights from Health Insurance Participations

Poverty reduction is the primary goal of the United Nations 2030 Agenda for Sustainable Development. Enhancing the purchase rate of health insurance is essential for alleviating poverty caused by health shocks, as it serves as a crucial risk management tool for addressing health-related risks. In this paper, we investigate the impact of digital inclusive finance on household participation in terms of health insurance and financial vulnerability, utilizing the Digital Inclusive Finance Index developed by Peking University and survey data from the China Household Finance Survey. Our findings indicate that the advancement of digital inclusive finance can significantly reduce the risk of household financial vulnerability by increasing household health insurance enrollment rate. The findings are robust across various digital inclusive finance indices, different metrics for financial vulnerability, alternative econometric models, and additional control variables. Furthermore, the effects of digital inclusive finance on health insurance enrollments and household financial vulnerability are particularly pronounced among urban households and those led by younger and more risk-averse household heads. Our findings advocate for further development of digital inclusive finance, mainly targeted at rural households and those with elderly heads, to enhance health insurance participation and mitigate the risk of illness-related poverty.