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Innovation in Rural Finance: Microfinance’s Impact on Prosperity and Efficiency in China

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Abstract

This paper explores the effectiveness of microfinance in boosting production and income among rural populations across China from 2015 to 2020. Using the three-stage super-efficiency SBM model to analyze panel data from 31 provinces, the study highlights microfinance as a pivotal tool for promoting rural economic well-being primarily through improvements in technical efficiency. Despite the overall positive impact, the study identifies significant regional efficiency variances influenced by external environmental factors, diminishing effectiveness from eastern to western regions. These findings underscore the complex interplay between microfinance interventions and regional economic dynamics, leading to tailored recommendations for enhancing technical management, reducing disparities to foster innovation, and creating conducive environments for microfinance. Also, the research aligns with the principles of the knowledge-based economy, emphasizing the critical role of innovation, human capital development, and institutional support in driving rural revitalization efforts. This comprehensive analysis sheds light on the nuanced effects of microfinance in rural China and contributes to policy formulation aimed at achieving coordinated, sustainable, and inclusive economic growth in rural areas. Through a detailed examination of the interrelations between microfinance and rural prosperity, this study offers valuable insights for policymakers, practitioners, and stakeholders working towards the common goal of rural revitalization and equitable progress within the knowledge economy framework.

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Data Availability

The datasets used and/or analyzed during the current study are available from the corresponding author on reasonable request.

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Funding

This paper was supported by the National Philosophy and Social Science Foundation of China (grant number 2020XSH017).

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Authors and Affiliations

  1. School of Mathematics and Information Science, North Minzu University, Yinchuan, 750021, China

    Jumei Shen & Yali Lu

  2. The Key Laboratory of Intelligent Information and Big Data Processing of Ning**a Province, North Minzu University, Yinchuan, 750021, China

    Jumei Shen

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  1. Jumei Shen
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Shen, J., Lu, Y. Innovation in Rural Finance: Microfinance’s Impact on Prosperity and Efficiency in China. J Knowl Econ (2024). https://doi.org/10.1007/s13132-024-02155-w

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