Financial Inclusion and Rural Entrepreneurship

Using the 2014–2021 China Rural Entrepreneurship Index (CREI) and county-level data from the China County Statistical Yearbook, this paper empirically investigates the impact of large banks’ service expansion into rural areas on rural entrepreneurship and its underlying mechanisms. Adopting a Difference-in-Differences (DID) approach as a quasi-natural experiment, the study provides robust evidence on how financial resource allocation affects entrepreneurial dynamics in rural China. The results show that, first, the expansion of large banks’ services into rural areas significantly promotes rural entrepreneurship, and the finding remains consistent after a series of robustness checks, including placebo tests and alternative specifications. Second, mechanism analysis indicates that this positive effect operates primarily through the alleviation of financing constraints, as large banks increase the supply of formal credit and improve capital accessibility for rural households and enterprises. Third, heterogeneity analysis reveals that the impact is more pronounced in the central region, in major grainproducing areas, in non-poor counties, and in regions with relatively flat terrain and a lower degree of marketization, suggesting that institutional environments and geographic conditions shape the effectiveness of financial service expansion. Overall, the findings highlight the importance of large banks in addressing the financing difficulties of rural entrepreneurs, providing policy implications for strengthening rural financial systems and promoting highquality rural development.