Rural Finance And Rural Economic Growth: An Empirical Analysis

Rural district is a very important part of the dual economy. As the development of rural economy, farmers'income is growing quickly, so as the financial demand in the rural area. After reviewing a lot of papers on financial development, the paper mainly studies four aspects as follows:Firstly, the paper analyzes the current condition of rural finance demand and supply. The paper analyzes the financial demand of different rural operation subjects, such as farmers, specialized farmers, family farms, rural credit cooperatives and rural enterprises. The financial demand of farmers is mainly used in life expenditure, while that of specialized farmers and family farms is used in liquid money demand. The financial demand of rural credit cooperatives is mainly below 50,000 yuan, for the members are constructed of many short-sighted farmers. The financial demand of rural enterprises is quite large. Meanwhile, the domestic formal rural finance institutions improve a lot in recent years, but still can't fit the finance demand in rural areas. Moreover, from the aspect of heterogeneous rural finance demand and supply, the paper holds the view that mutli-level rural finance market should be constructed.Secondly, the paper studies the relation of different rural operation subjects'income and credit from micro level, which implies the relation of rural financial development and rural economic growth. On one hand, borrowing from banks can improve different rural operation subjects' income by increasing size or purchasing means of production, which in the end, enhances rural economic growth; on the other hand, the income of different rural operation subjects limits their credit lines, which affects rural finance development. Thirdly, the paper considers the effect of rural financial development on rural economic growth from county level, finding that rural financial development has a significant effect on rural economic growth by increasing finance demand, adding production investment, improving labor structure, promoting technological progress, etc.Lastly, taking spatial correlation into consideration, the paper analyzes the impact of rural financial development on rural economic growth by using SEM, SAR and SDM. It turns out that rural financial development and rural economic growth both have intense spatial correlation. The rural financial development has a positive effect on rural financial growth, about 0.13, which is overestimated by using OLS. Meanwhile the impact of rural financial development on rural economic growth is mainly relied on the neighborhood's financial development.The paper has six policy recommendations:firstly, the government should enhance the development of middle and western areas to solve the unbalanced problem. Secondly, moderately relax rural financial controls, explore rural finance channels and optimize relative policies to support rural finance development. Thirdly, innovative financial products to facilitate financial serve in agricultural development. Fourthly, establish proper investment and finance environment to attract more enterprise and finance institutions and promote rural economic development and transition. Fifth, accelerate rural property right system reform and construct rural property rights trading platform to lay the foundation for the flow of farmers' assets and rural financial reform. Lastly, develop inclusive finance to make more people share finance serve According to the different traits of different operate subject, the government should build multi-level rural finance market to satisfy the increasing finance demand of rural areas, agriculture and farmers.