The impact of digital finance on household educational investment: evidence from China

This paper examines the impact of digital finance development on household educational investment in China. We employ a fixed-effects panel-data regression with an instrumental-variable approach to provide evidence consistent with a causal relationship. We find that a one-standard-deviation increase in the digital finance index raises household education spending by approximately 21.6%. The positive effect is more pronounced in credit-constrained regions by expanding households’ credit access. Our findings suggest that the advantages of greater financial inclusion, such as improved access to credit, outweigh the potential risks, facilitating increased educational investment and highlighting how digital finance can foster equitable educational outcomes.