Enhancing financial inclusion in China amidst COVID-19: Opportunities, challenges, and strategies

Fadi Ghosn, Mohamad Zreik, Ghina Awad, Suha Tahan, Ahmad Ashaal

Article ID: 3777
Vol 8, Issue 6, 2024

VIEWS - 456 (Abstract) 163 (PDF)

Abstract


This paper examines the impact of the COVID-19 pandemic on financial inclusion in China, a country with a significant agricultural sector and an evolving digital landscape. The pandemic has accelerated the shift towards digital financial services, underscoring disparities in access. This study explores the pre- and post-pandemic scenarios of financial inclusion in China, evaluates the economic and social impacts of the pandemic, and assesses the role of digital transformation in the financial sector. It also investigates the changing roles of commercial banks and microfinance institutions, the integration of technology in finance, and the development of rural-urban economic linkages. The paper aims to propose strategies to enhance financial inclusion, ensuring it reaches the most vulnerable, and concludes with recommendations for creating a more equitable and robust economic system.


Keywords


financial inclusion; purchasing power of people; COVID-19; disadvantaged poor; infrastructure; income distribution; digital transformation; technology transfer; social losses; linkages between rural and urban

Full Text:

PDF


References


Agarwal, S., & Zhang, J. (2020). FinTech, Lending and Payment Innovation: A Review. Asia-Pacific Journal of Financial Studies, 49(3), 353–367. Portico. https://doi.org/10.1111/ajfs.12294

Al Amin, Md., Arefin, Md. S., Alam, Md. S., & Rasul, T. F. (2022). Understanding the Predictors of Rural Customers’ Continuance Intention toward Mobile Banking Services Applications during the COVID-19 Pandemic. Journal of Global Marketing, 35(4), 324–347. https://doi.org/10.1080/08911762.2021.2018750

Ameen, N., Hosany, S., & Tarhini, A. (2021). Consumer interaction with cutting-edge technologies: Implications for future research. Computers in Human Behavior, 120, 106761. https://doi.org/10.1016/j.chb.2021.106761

Arner, D. W., Zetzsche, D. A., Buckley, R. P., & Barberis, J. N. (2019). The Identity Challenge in Finance: From Analogue Identity to Digitized Identification to Digital KYC Utilities. European Business Organization Law Review, 20(1), 55–80. https://doi.org/10.1007/s40804-019-00135-1

Awuah, S. B., & Addaney, M. (2016). The Interactions between Microfinance Institutions and Small and Medium Scale Enterprises in the Sunyani Municipality of Ghana. Asian Development Policy Review, 4(2), 51–64. https://doi.org/10.18488/journal.107/2016.4.2/107.2.51.64

Brodeur, A., Gray, D., Islam, A., & Bhuiyan, S. (2021). A literature review of the economics of COVID‐19. Journal of Economic Surveys, 35(4), 1007–1044. Portico. https://doi.org/10.1111/joes.12423

Cao, S., Nie, L., Sun, H., et al. (2021). Digital finance, green technological innovation and energy-environmental performance: Evidence from China’s regional economies. Journal of Cleaner Production, 327, 129458. https://doi.org/10.1016/j.jclepro.2021.129458

Chishti, S., & Puschmann, T. (2018). The Wealthtech book: The FinTech handbook for investors, entrepreneurs and finance visionaries. John Wiley & Sons.

De Ferranti, D. M. (2005). Beyond the city: The rural contribution to development. World Bank Publications.

Didier, T., Huneeus, F., Larrain, M., & Schmukler, S. L. (2021). Financing firms in hibernation during the COVID-19 pandemic. Journal of Financial Stability, 53, 100837. https://doi.org/10.1016/j.jfs.2020.100837

Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of Business Research, 117, 284–289. https://doi.org/10.1016/j.jbusres.2020.06.008

Dotsey, S. (2022). COVID-19 and Microcredit: Dissecting an NGO’s Training, Financial Support, and Women Empowerment Programmes. Social Sciences, 11(9), 402. https://doi.org/10.3390/socsci11090402

Du, L., Razzaq, A., & Waqas, M. (2022). The impact of COVID-19 on small- and medium-sized enterprises (SMEs): empirical evidence for green economic implications. Environmental Science and Pollution Research, 30(1), 1540–1561. https://doi.org/10.1007/s11356-022-22221-7

Fu, J., & Mishra, M. (2022). Fintech in the time of COVID−19: Technological adoption during crises. Journal of Financial Intermediation, 50, 100945. https://doi.org/10.1016/j.jfi.2021.100945

Gomber, P., Kauffman, R. J., Parker, C., & Weber, B. W. (2018). On the Fintech Revolution: Interpreting the Forces of Innovation, Disruption, and Transformation in Financial Services. Journal of Management Information Systems, 35(1), 220–265. https://doi.org/10.1080/07421222.2018.1440766

Goolsbee, A., & Syverson, C. (2021). Fear, lockdown, and diversion: Comparing drivers of pandemic economic decline 2020. Journal of Public Economics, 193, 104311. https://doi.org/10.1016/j.jpubeco.2020.104311

Hasan, Md. M., Yajuan, L., & Khan, S. (2020). Promoting China’s Inclusive Finance Through Digital Financial Services. Global Business Review, 23(4), 984–1006. https://doi.org/10.1177/0972150919895348

Hashemi Joo, M., Nishikawa, Y., & Dandapani, K. (2019). Cryptocurrency, a successful application of blockchain technology. Managerial Finance, 46(6), 715–733. https://doi.org/10.1108/mf-09-2018-0451

Karlan, D., Ratan, A. L., & Zinman, J. (2014). Savings by and for the Poor: A Research Review and Agenda. Review of Income and Wealth, 60(1), 36–78. Portico. https://doi.org/10.1111/roiw.12101

Khan, S. U. (2022). Financing constraints and firm-level responses to the COVID-19 pandemic: International evidence. Research in International Business and Finance, 59, 101545. https://doi.org/10.1016/j.ribaf.2021.101545

Kitsios, F., Giatsidis, I., & Kamariotou, M. (2021). Digital Transformation and Strategy in the Banking Sector: Evaluating the Acceptance Rate of E-Services. Journal of Open Innovation: Technology, Market, and Complexity, 7(3), 204. https://doi.org/10.3390/joitmc7030204

Kroeber, A. R. (2020). China’s Economy: What Everyone Needs to Know. Oxford University Press.

Kshetri, N. (2016). Big data’s role in expanding access to financial services in China. International Journal of Information Management, 36(3), 297–308. https://doi.org/10.1016/j.ijinfomgt.2015.11.014

Labouré, M., & Deffrennes, N. (2022). Democratizing finance: The radical promise of fintech. Harvard University Press.

Li, K., Kim, D. J., Lang, K. R., et al. (2020). How should we understand the digital economy in Asia? Critical assessment and research agenda. Electronic Commerce Research and Applications, 44, 101004. https://doi.org/10.1016/j.elerap.2020.101004

Li, L., Taeihagh, A., & Tan, S. Y. (2023). A scoping review of the impacts of COVID-19 physical distancing measures on vulnerable population groups. Nature Communications, 14(1). https://doi.org/10.1038/s41467-023-36267-9

Liu, X., Liu, Y., & Yan, Y. (2020). China macroeconomic report 2020: China’s macroeconomy is on the rebound under the impact of COVID-19. Economic and Political Studies, 8(4), 395–435. https://doi.org/10.1080/20954816.2020.1844609

Liu, Y., Lee, J. M., & Lee, C. (2020). The challenges and opportunities of a global health crisis: the management and business implications of COVID-19 from an Asian perspective. Asian Business & Management, 19(3), 277–297. https://doi.org/10.1057/s41291-020-00119-x

Mansour, H. (2021). How successful countries are in promoting digital transactions during COVID-19. Journal of Economic Studies, 49(3), 435–452. https://doi.org/10.1108/jes-10-2020-0489

Matthews, K., Thompson, J., & Zhang, T. (2023). Economics of Bankin. The World Scientific.

Mishra, B., & Prashar, A. (2021). Customers’ readiness for a paradigm shift towards cyberspace: An exploratory investigation in Indian retail banking. International Journal of Financial Innovation in Banking, 3(1), 1. https://doi.org/10.1504/ijfib.2021.114924

Mogaji, E., Adeola, O., Hinson, R. E., et al. (2021). Marketing bank services to financially vulnerable customers: Evidence from an emerging economy. International Journal of Bank Marketing, 39(3), 402–428. https://doi.org/10.1108/ijbm-07-2020-0379

Moosavi, J., Fathollahi-Fard, A. M., & Dulebenets, M. A. (2022). Supply chain disruption during the COVID-19 pandemic: Recognizing potential disruption management strategies. International Journal of Disaster Risk Reduction, 75, 102983. https://doi.org/10.1016/j.ijdrr.2022.102983

Neaime, S., & Gaysset, I. (2018). Financial inclusion and stability in MENA: Evidence from poverty and inequality. Finance Research Letters, 24, 230–237. https://doi.org/10.1016/j.frl.2017.09.007

Qian, Y., & Fan, W. (2020). Who loses income during the COVID-19 outbreak? Evidence from China. Research in Social Stratification and Mobility, 68, 100522. https://doi.org/10.1016/j.rssm.2020.100522

Qiu, W., Wu, T., & Xue, P. (2022). Can Mobile Payment Increase Household Income and Mitigate the Lower Income Condition Caused by Health Risks? Evidence from Rural China. International Journal of Environmental Research and Public Health, 19(18), 11739. https://doi.org/10.3390/ijerph191811739

Renu, N. (2021). Technological advancement in the era of COVID-19. SAGE Open Medicine, 9, 205031212110009. https://doi.org/10.1177/20503121211000912

Sadok, H., Sakka, F., & El Maknouzi, M. E. H. (2022). Artificial intelligence and bank credit analysis: A review. Cogent Economics & Finance, 10(1). https://doi.org/10.1080/23322039.2021.2023262

Shah, S. M. A., Mohammad, D., Qureshi, M. F. H., et al. (2020). Prevalence, Psychological Responses and Associated Correlates of Depression, Anxiety and Stress in a Global Population, During the Coronavirus Disease (COVID-19) Pandemic. Community Mental Health Journal, 57(1), 101–110. https://doi.org/10.1007/s10597-020-00728-y

Tooze, A. (2021). Shutdown: How Covid shook the world’s economy. Penguin UK.

Ullah, A., Pinglu, C., Ullah, S., et al. (2020). The Role of E-Governance in Combating COVID-19 and Promoting Sustainable Development: A Comparative Study of China and Pakistan. Chinese Political Science Review, 6(1), 86–118. https://doi.org/10.1007/s41111-020-00167-w

Van Raaij, W. F. (2016). Understanding consumer financial behavior: Money management in an age of financial illiteracy. Springer.

Vasile, V., Panait, M., & Apostu, S.-A. (2021). Financial Inclusion Paradigm Shift in the Postpandemic Period. Digital-Divide and Gender Gap. International Journal of Environmental Research and Public Health, 18(20), 10938. https://doi.org/10.3390/ijerph182010938

Wang, J., Ho, C. Y. (Chloe), & Shan, Y. G. (2024). Does cybersecurity risk stifle corporate innovation activities? International Review of Financial Analysis, 91, 103028. https://doi.org/10.1016/j.irfa.2023.103028

Wang, Y., Wang, X., Zhang, Z., et al. (2023). Role of fiscal and monetary policies for economic recovery in China. Economic Analysis and Policy, 77, 51–63. https://doi.org/10.1016/j.eap.2022.10.011

Weber, O., & Feltmate, B. (2016). Sustainable banking: Managing the social and environmental impact of financial institutions. University of Toronto Press.

Williams, F., Philip, L., Farrington, J., & Fairhurst, G. (2016). ‘Digital by Default’ and the ‘hard to reach’: Exploring solutions to digital exclusion in remote rural areas. Local Economy: The Journal of the Local Economy Policy Unit, 31(7), 757–777. https://doi.org/10.1177/0269094216670938

Winter, J. S., & Davidson, E. (2022). Harmonizing regulatory regimes for the governance of patient-generated health data. Telecommunications Policy, 46(5), 102285. https://doi.org/10.1016/j.telpol.2021.102285

Ye, W., Chen, W., & Fortunati, L. (2021). Mobile Payment in China: A Study from a Sociological Perspective. Journal of Communication Inquiry, 47(3), 222–248. https://doi.org/10.1177/01968599211052965

Yu, J., & Nuangjamnong, C. (2022). The Impact of Mobile Banking Service on Customer Satisfaction: A Case Study of Commercial Banks in China. United International Journal for Research & Technology, 3(10), 43–64.

Zhang, M. Y., & Williamson, P. (2021). The emergence of multiplatform ecosystems: Insights from China’s mobile payments system in overcoming bottlenecks to reach the mass market. Technological Forecasting and Social Change, 173, 121128. https://doi.org/10.1016/j.techfore.2021.121128

Zhang, W., Wang, Y., Yang, L., & Wang, C. (2020). Suspending Classes Without Stopping Learning: China’s Education Emergency Management Policy in the COVID-19 Outbreak. Journal of Risk and Financial Management, 13(3), 55. https://doi.org/10.3390/jrfm13030055

Zhao, L., Cao, C., Li, Y., & Li, Y. (2022). Determinants of the digital outcome divide in E-learning between rural and urban students: Empirical evidence from the COVID-19 pandemic based on capital theory. Computers in Human Behavior, 130, 107177. https://doi.org/10.1016/j.chb.2021.107177

Zheng, C., & Zhang, J. (2021). The impact of COVID-19 on the efficiency of microfinance institutions. International Review of Economics & Finance, 71, 407–423. https://doi.org/10.1016/j.iref.2020.09.016

Zreik, M. (2023). Governance in Post-COVID-19 China. Advances in Logistics, Operations, and Management Science, 214–235. https://doi.org/10.4018/978-1-7998-9213-7.ch011

Zreik, M., Iqbal, B. A., & Rahman, M. N. (2022). Outward FDI: Determinants and Flows in Emerging Economies: Evidence from China. China and WTO Review, 8(2), 385–402. https://doi.org/10.14330/cwr.2022.8.2.07

Zreik, M., Marzuki, S. S., & Iqbal, B. A. (2023). Deepening Financial Inclusion through Digitization: A Case Study of Microfinance in China. ASEAN Entrepreneurship Journal, 9(2), 9–21.




DOI: https://doi.org/10.24294/jipd.v8i6.3777

Refbacks

  • There are currently no refbacks.


Copyright (c) 2024 Fadi Ghosn, Mohamad Zreik, Ghina Awad, Suha Tahan, Ahmad Ashaal

License URL: https://creativecommons.org/licenses/by/4.0/

This site is licensed under a Creative Commons Attribution 4.0 International License.