Using the survey data collected from 1947 farmers in Ningxia Hui autonomous region and Shaanxi and Shandong Provinces,this paper employs an endogenous switching regression model to explore the effect of participation in digital financial markets on rural households’ income level.This study also uses the fields decomposition method to test the effect of direction and degree of participation in digital financial markets on the income inequality.The results show that participation in digital financial markets increases the farmers households’ income level.In the counterfactual framework,farmers who originally participated in digital financial markets would undergo income decrease by 6.40% in case they decide against participation.In contrast,the farmers who did not participate in digital financial markets could experience income increase by 9.57% if they decide to participate in digital financial markets.Digital financing has the highest impact on farmer households’ income,followed by mobile payments and digital investment.Further research finds that participation in digital financial markets has widened the rural households’ income inequality,the contribution rate of which is 14.79%.Among them,digital financing has contributed the most to the rural households’ income inequality,followed by mobile payments and digital investment.