Digital inclusive finance and common prosperity: Spatial spillovers through innovation and entrepreneurship in China

Exploring how to promote common prosperity in the context of the rapidly developing digital economy carries significant theoretical and practical importance. Incorporating spatial interactions among economic factors into the analytical framework, this study employs panel data from 273 prefecture-level cities in China spanning 2011–2023. Using a two-way fixed-effects Spatial Durbin Model (SDM) and a spatial mediation model, the mechanisms through which digital inclusive finance (DIF) affects common prosperity are empirically examined. The results reveal that DIF exerts significant positive direct and spatial spillover effects on common prosperity. Heterogeneity tests indicate that the effects are more pronounced for the usage-depth dimension of digital finance, eastern regions, and core cities. Further mechanism tests confirm that innovation and entrepreneurship serve as critical mediating channels. This study contributes to the literature by enriching the spatial theoretical framework of financial development and common prosperity, and provides policy implications for leveraging DIF to achieve equitable and sustainable growth.