Research on World Agricultural Economy

There are still 719 million people living in absolute poverty worldwide, and they account for 64% of the total number of people engaged in agriculture. Based on this, this paper examines whether there is a “threshold effect” in the moderating mechanism of digital infrastructure on the effectiveness of microfinance in alleviating poverty among farmers by employing Dynamic Common Correlated Effects estimation based on panel data of 148 observations from six South Asian countries (2000–2024). We found three key “activation thresholds”: when the proportion of internet users in the population is lower than 8%, microfinance has little effect on reducing poverty; when it reaches 20%, microfinance shows some effectiveness in promoting development; once this ratio increases further to 65%, microfinance will produce a “multiplicative effect.” The interaction term coefficient (−0.0428) at the 1% significance level indicates that every time internet users increase by 10% points, microfinance’s ability to alleviate poverty will be enhanced by 4.28% points.The results show that there exist two thresholds. First, if a community already has some existing microloans but no Internet access yet (below the first threshold), adding new microloans will have no additional effects on reducing poverty. Second, once Internet access reaches a certain level (above the second threshold), adding more microloans would further decrease poverty, i.e., there is a super-additive effect between microloans and Internet access.