Mobile Payment Application and Rural Household Consumption—Evidence from China Household Finance Survey

How to release rural consumption potential is currently of great significance for the sustainable economic growth of the developing world. Using representative survey data from the China Household Finance Survey (CHFS), this paper studied the impacts of mobile payments on rural household consumption and its mechanisms. This study constructed instrumental variables from the perspective of induced demand for mobile payments to overcome the endogeneity problem and found that the application of mobile payments significantly promoted rural household consumption by 29.8–52.3%. Mechanism analysis indicated that mobile payments could ease liquidity constraints, enrich consumption choice, and improve payment convenience for rural households, which are the main channels behind the above finding. Heterogeneous analysis showed that the impact of mobile payments on household consumption of the elderly and less educated was relatively higher. Moreover, this study found that mobile payments are conducive to promoting the consumption upgrading of rural households by significantly improving their enjoyment consumption. In addition, although it encourages rural households to consume more online and mobile payment methods, it does not crowd out the effect of rural households’ offline consumption. The findings of this paper provide new insight into the role of technical progress in promoting total consumption and consumption upgrading in rural areas.