Abstract

As the global focus shifts from eradicating absolute poverty to addressing relative poverty, rural areas remain particularly vulnerable due to structural disadvantages such as limited access to financial services, education, and economic opportunities. Relative poverty involves multidimensional deprivation, raising the risk of households falling back into poverty. Financial technology—an increasingly integral element of information and communication technologies—defined as the application of digital innovations including mobile platforms, big data, and artificial intelligence to financial services, has the potential to enhance financial inclusion and reduce rural poverty vulnerability. This study uses data from the China Household Finance Survey and the Digital Financial Inclusion Index to empirically examine the impact of financial technology on the vulnerability of rural households to multidimensional relative poverty. To address potential endogeneity arising from reverse causality and omitted variables, we adopt an instrumental variable strategy based on lagged fintech development and geographical distance to China’s fintech hub, and control for a comprehensive set of household, demographic, and regional characteristics. The results show that fintech significantly reduces rural households’ vulnerability to multidimensional relative poverty. Heterogeneity analysis reveals that this effect is more pronounced among households with lower assets, lower educational attainment, and those located in less‑developed regions. Mechanism analysis suggests that financial technology operates partly by improving household financial literacy. Grounded in Sen's capability approach, the study treats fintech as an expansion of the capability set through which households convert resources into security against future deprivation. It thereby extends ICT4D research on financial inclusion from static income poverty to dynamic, multidimensional vulnerability, with implications for other developing countries facing similar financial access constraints.

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