Income Distribution And Financial Structure: A Comparative Study Of China And OECD Countries

Unlike the traditional researches on how financial structure affects income distribution, using data from Flow of Funds Statement and Balance Sheet of OECD countries as well as China, the dissertation studies how income distribution affects the financial structure from a macro perspective.After reviewing previous studies on the relationship between financial structure and income distribution, to bring to light the effect on financial structure by income distrubition, the paper makes a detailed analysis on income distribution and financial structure of 22 OECD countries, and pays specially attention on the income distribution and the financial structure of household sectors in these countries. By factor analysis and multiple regression analysis in cross section, this paper confirms that income distribution can significantly affect the financial structure, for example, the disposable income of the household sector determines the scale of various financial institutons, as well as the scale and structure of financial assets, which is held by the household sector; economies with higher compensation of employees and lower operating surplus always have a larger scale of financing activities; while economies with higer net property income always have a larger scale of private credit issued by financial institutions and stock market capitalization. In household sectors, there has a significant positive correlation between the proportion of disposable income and mutual funds as well as securities other than shares'proportion in the total financial assets; household sectors'with higher compensation of employees have lager sacles of financial assets and liabilities, but securities other than shares is the opposite.Next, the dissertation studies the financial structure and income distribution of China, and makes comparison between China and OECD countries. The paper finds the defects in China's financial structure partly due to China's income distribution. China's household sector has a weak position in income distribution, and has limited sources of income. Finally, The paper also compares between financial structures and income distributions in China, the United States as well as Germany. Similar to Germany, banks are extremely important in China's financial system, while the scale of the financial markets is undeveloped. The difference with Germany which implies the trail of China's financial structure is, all types of financial intermediaries exceeding banks are not active in China. The origin of the trail still comes from China's income distribution.To establish a healthy financial system, China should, increase the proportion of the household sector's disposable income; enlarge the proportion of compensation of employees in initial distribution reasonably, and reduce the gap in income distribution; increase the household's possession of properties to provide more sources of household sector's property income; protect the basic livelihood of the residents adequately. Financial system itself also should improve and innovate their products, and lower the thresholds of financial instruments.