| Since 2004, seven consecutive Central First Document emphasizes promoting "San Nong" development. As an important node to balance urban and rural development, county economy is the cutting point to solve the issues of "San Nong". County finance is the core of county economy. To achieve agricultural development, rural prosperity and increasing farmers'income cannot leave the effective support from county financial. From separation of ABC and RCC in 1993, establishment of the ADBC in 1994, reform of RCC in 2003 to "ease rural financial market access, gradually open rural financial market" in 2006, China's rural financial reform has achieved some success during recent more than ten years.However, the continuous introduction of the rural financial policies and measures mostly show characteristics of strong financial control, such as required organizational forms of rural capital supply channels, credit control, credit rationing and credit use control, etc. On the one hand, artificial market access barriers are set by laws or administrative means; On the other hand, economic barriers are put because of the investment cost caused by information asymmetry and market access restrictions between investors both within and outside. These all limit free flow of financial resources among different regional financial markets, and market-oriented degree of rural economy is backward due to the long period of urban-rural dual structure system in China, so county rural financial development appears significant regional and imbalance characteristics, and financial market segmentation long exist.Although theoretical studies have shown that a set of financial constraint policies consists of interest rate regulation, market access restrictions and asset substitution limit help promote economic growth under the given conditions of stable macroeconomic environment, predictable low inflation rate and low financial development level. However, due to the limitation of research techniques, research methods as well as different samples, domestic scholars'research results can not fully and accurately reveal the status of county rural financial market segmentation. The reason and influence on economy of rural financial segmentation need be for further confirmed by empirical analysis. Trying to find different regional effect on financial development and economy growth of segmentation is the direction and objectives of the county rural financial development.Current research for the issue is still not fully. First, rural was studied as a whole, and the rural internal differences were neglected. Second, measure of financial development limited in FIR, financial depth and HHI, evaluation index system of county rural financial development need to be built. Third, the study on relation between rural financial development and economy growth did not combined with financial market segmentation.Based on the analysis framework of agricultural economics, finance, development economics and regional economics, this thesis selects counties of different financial and economic development level as samples, and analyzes causes and motivation of rural financial market segmentation, and explores mechanism of effect on county rural financial development and county economy growth of rural financial segmentation, and searches the premise condition of financial market integration in unbalanced rural areas, and provides theoretical basis and policy recommendations for improving county rural finance and promoting county economic growth. The full text is divides into eight parts. The main contents and conclusions of the study are as follows:Part 1:Rural financial market segmentation test based on capital mobilitySegmented financial market is caused by restriction of financial system and financial policies and administrative bulwarks in different regions. Based on F-H theorem, applying GLS model, deposits-loans correlation coefficient is estimated employing a panel data set for 52 counties in Jiangsu Province over the period 1994-2009.The sample are divided into three small samples according to events in rural financial reform of RCC. The extent of segmentation changed like U shape with the rural financial reform process, and strong controlling policies in services to "San Nong" strengthens segmentation.Part 2:Rural financial market segmentation test based on capital allocation efficiencyCounty rural financial market segmentation has been proved to exist from the perspective of rural credit flow. On the one hand, employing a panel data set for 39 counties in Jiangsu Province over the period 1997-2009, marginal product of capital is estimated by perpetual inventory method. Among southern, middle and northern part of Jiangsu, within-group variation of marginal product of capital is significantly higher than between-group variation, reflecting that the capital does not interflow freely. On the other hand, theoretical model of capital flow is established, and net credit funds do not follow rules of pursuing profits.Overall, low-cost credit fund has kept pouring into the rural financial market, such as agricultural supporting relending and subsidized loans. Meanwhile, the establishment of Postal Savings Bank links postal savings funds to rural credit capital, which significantly curb capital flow out.Part 3:Incentive motives of county rural financial market segmentationThere is social welfare loss if regional financial markets are segmented either in competition financial market or in monopoly financial market. The deeper the degree of segmentation is, the greater the welfare loss is. The utility of market integration in two Periods is compared with the utility of which financial market is segmented in period 1 and integrated in period 2 by establishing inter-temporal game model, and the former one is lower for the poor counties. Due to the capital accumulation effect, poor counties can improve negotiations of threat points in period 2 to gain more benefits through developing solely in period 1. In some condition, temporary financial market segmentation is rational for poor counties, but social welfare is lost for the whole society.Part 4:Unbalanced rural financial development under financial market segmentationA general evaluation index system of rural regional financial development by 15 indicators in 4 aspects is built according to the rule of comprehensiveness, substitutability, reciprocity, feasibility and instructiveness. Employing 39 counties in Jiangsu Province during 1994-2009 as a sample, it measures factor scores on bank size, bank structure, fund allocation efficiency, savings into investment efficiency and financial availability by factor analysis method. Status and trend of county rural financial development are analyzed from five common factors, and the Pearson correlations between five factors and financaial segmentation are analyzed.Financial size and financial availability rise gradually in Jiangsu Province. After lowing the threshold for the rural financial market entry, monopoly financial market transformed into competition financial market. Financing behavior differs in southern, middle and northern part of Jiangsu due to the development differences of private sectors. The average of saving-investment conversion efficiency is highest in northern part of Jiangsu.Part 5:Relation of county rural financial market segmentation and economy growth Introducing index of financial market segmentation and five common factors of county rural financial development into endogenous growth models, it analyzes the relation of county rural financial market segmentation and economy applying system GMM estimation. Financial size, concentrated financial structure, financial allocation efficiency, saving-investment conversion efficiency and financial availability are positive with county economy growth.County rural financial market has two mechanism of county economy. On the one hand, it effect on economy directly. Overall, county rural financial segmentation protect county economy growth. On the other hand, it effect on economy through county rural finance indirectly. From the regional perspective, the indirect effect of financial segmentation is opposite across counties with different levels of economic development. In contrast, financial segmentation weakens positive effect of financial size on economy growth in counties in southern part of Jiangsu, not in northern part of Jiangsu. From the staged perspective, implementation of policy about easing rural financial market access in 2006 changed rural financial structure. Before 2007, financial segmentation and concentrated financial structure improves county economy growth. Since 2007, they have harmed economy growth.
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