China's Financial Development And Income Inequality

Because of the established income distribution inequality,in the process of promoting economic growth,"threshold" of financial services effects affects the income distribution and behavioral choices of optimal utility of micro-economic agents.This paper demonstrate the microscopic mechanism of financial development and income inequality,analysis of the number relationship between financial development and income distribution by China's provincial panel data.According to classification method of economic research on micro-economic,economic agents is divided into two types of homes and businesses,to distinguish between households and businesses access to financial services for different purposes.Because human capital is key variables affect household income,this paper construct theoretical model of optimal human capital investment decisions,to research the mechanism of financial development,investment in human capital inequality and income distribution,and then test the number relationship by China's provincial balanced panel data from 1997 to 2011,empirical results showed that:Financial development and income inequality presents significant inverted U-shaped relationship,human capital as an intermediary of transmission mechanism between financial development and income inequality,financial development promote the level of human capital,human capital and income inequality showed a significant inverted U-shaped relationship.Since human capital is a major factor of economic growth,this study also demonstrated the reasons for the formation of the Kuznets curve from the microscopic point.Financial development impacts the different nature of business performance,and indirectly leads to the workers' income inequality among different enterprises.On the basis of the nature of ownership of China's industrial enterprises for classification,study the mechanism of the impact of the financial development on the income of workers of the different nature of industrial enterprises.Article defines financial development as financial depth,financial structure and financial competition,and empirical analysis by 2001-2011 provincial panel data finds:financial depth is the influencing factors to enterprise workers income inequality,financial depth increase income inequality between state-owned enterprises and collective enterprises,other enterprises and collective enterprises,state-owned enterprises and other enterprises workers;the more of the indirect indicators reflect the financial structure-bank financing to total financing proportion,the more to reduce the income inequality between workers of state-owned industrial enterprises and other industrial enterprises;reflect the degree of competition in the financial indicators-large commercial banks and policy banks accounted for a higher proportion of indirect financing,the more to reduce the workers income inequality between the state-owned industrial enterprises and other industrial enterprises,but increased workers income inequality between the state-owned industrial enterprises and collective industrial enterprises,other industrial enterprises and collective industrial enterprises.This paper build microscopic mechanism of the impact of income inequality on consumption volatility in the credit supply case,test the impact of income inequality,financial development for the consumption volatility by using China's provincial panel data.This study finds that:it shows a significant negative correlation between China's income inequality and consumption volatility in the period 1988-1998 of relatively low level of economic development;it shows a significant positive correlation between China's income inequality and consumption volatility in the 1999-2009 period of higher level of economic development.It shows negative relationship between credit supply and consumption volatility in all periods.This paper portrays scatter diagram of variables panel data,describing the relationship between income inequality and economic growth fluctuations,find in period of low-income,it shows negative correlations between income inequality and economic growth fluctuations,in period of high-income,it shows positive correlations between income inequality and economic growth fluctuations,to some extent that income inequality has become the current impact one of the reasons for China's economic fluctuations.By the theoretical analysis and econometric tests,we can learn it is theoretical significance and practical value to study the relationship between financial development and income inequality from a micro perspective.The inequality of opportunity of economic agents is the root causes of income inequality.Financial development is a key factor to determine economic agents' access to economic opportunities.Continue to promote improvement of financial development,so that all kinds of micro-economic agents have access to financial services,in particular through the development of a certain degree of preferential policies and measures,to provide more financial services to meet low-income groups' needs,and promote equality of opportunity of financial services,so that all the income level of economic agents will be able to establish in inter-temporal optimization based on the financial services,it is an important measure to ease the income inequality and promote economic stability of growth.