How to Improve the Efficiency of Financial Inclusion for Poverty Alleviation in China? An Empirical Analysis

Financial inclusion has emerged as a new strategy to enhance family financial well-being and alleviate poverty in China and substantial financial resources have been devoted into revitalizing rural economic and social development to alleviate poverty. While research on financial usage, financial literacy, and financial well-being has received substantial attention in the consumer and financial industry, there is a significant research gap in the fields of social work and poverty alleviation. The study examined the relationship between financial usage, financial literacy and financial well-being in China utilizing the 2019 China Household Finance Survey data. The findings reveal a positive correlation between financial usage and enhanced financial well-being. Moreover, the study recognized that financial literacy mediates and moderates the relationship between financial usage and financial well-being. These findings indicated the significant role of financial literacy in increasing household per capita income and achieving balance between income and expenditures. However, low-income households not only possess less financial usage, but have lower levels of financial literacy as well compared to non-low-income households. Recognizing this reality, interventions aimed at improving the financial literacy of low-income households become particularly important. These interventions may significantly improve financial inclusion effectiveness in poverty alleviation.