Digital Inclusive Finance, Household Energy Poverty, and Sustainable Development: Micro-Level Evidence from China

Abstract

Energy poverty remains a formidable obstacle to sustainable and inclusive growth, significantly hindering progress toward the UN Sustainable Development Goals (SDGs), especially within developing nations. As an important manifestation of multidimensional and relative poverty, alleviating household energy poverty is essential for promoting energy justice, enhancing household resilience, and advancing inclusive development pathways in China’s new development stage.

Utilizing panel data from the China Family Panel Studies (CFPS) spanning 2014–2022, alongside the Peking University Digital Inclusive Finance Index, this study empirically investigates the role of digital inclusive finance in mitigating household energy poverty and explores the underlying mechanisms. The results indicate that digital inclusive finance significantly alleviates household energy poverty. Mechanism analysis reveals that this effect operates primarily through enhancing household income diversification via non-agricultural employment opportunities (facilitated by mobile payment platforms and e-commerce financing) and strengthening financial resilience by easing liquidity constraints (via online micro-credit products and digital insurance services).

Heterogeneity tests reveal that DIF is most effective for households in eastern and western provinces, rural communities, and low-income groups, underscoring its potential to improve equity and those with lower levels of digitalization, highlighting its inclusive and equity-enhancing characteristics.

Overall, this study provides micro-level evidence on how digital financial development can be embedded within broader sustainability and energy poverty governance agendas. The findings suggest that strengthening digital financial infrastructure, optimizing inclusive financial product design, and improving financial risk prevention and institutional safeguards are crucial for building a sustainable, trinity-based energy poverty governance framework characterized by technological empowerment, financial innovation, and institutional support..

Keywords: Household energy poverty; Digital inclusive finance; Financial resilience; Income diversification; Sustainable development