The Empirical Analysis Between Rural Financial Development And Urban-rural Income Gap In Zhejiang Province

Since reform and open up policy, With the rapid growth of national economy and people's living standard has been greatly improved. Zhejiang Province becomes one of activist and fastest area in economic growth in our country, In 2008, the net average peasant's income in Zhejiang Province was 9258RMB,56 times of that in 1978, far higher than the average level of our country. However, in the face of these remarkable achievements, we should also see, the growth rate of the net average peasant's income in Zhejiang Province is far lower than that of the net average urban residents'income.There are various reasons, one of the important reasons is the rural financial development, so it is neccessary for us to research Urban-rural income gap from the rural financial development. This paper first describes the theory of financial development, including modern financial development and the rural financial developmerit.Then introduces the theory of urban-rural income gap, and on this basis, we study the mechanism how rural finance development impact on the urban-rural income gap.Second, describes the status of rural financial development and Urban-rural income in Zhejiang Province. Finally, establish the rural financial development indicators and the urban-rural income gap indicator, after unit root test, cointegration test, Granger causality test, we know that there is long-term cointegration relationship between rural financial development and Urban-rural income gap in Zhejiang Province, the scale indicator, the structure indicator, the efficiency indicator have a positive effect on Urban-rural income gap, while, the level of urbanization, rural economic development have a negative effect on Urban-rural income gap. In Zhejiang Province, the expansion of the scale of rural financial development, the improvement of the efficiency of rural financial development, and the expend of rural financial structure dragged a large income gap between urban and rural residents; And improve the level of urbanization and rural economic development, which is conducive to narrowing the Urban-rural income gap, and it is consistent with the conclusions of most domestic scholars.Finally, on the basis of the empirical analysis, for the rural financial development's existing problems in Zhejiang Province,we put forward the following recommendations:we should increase financial support in agriculture and rural enterprise development; improve the policy of the Agricultural Development Bank financial functions;develop rural banks;guide and standardize the financial development, give full use of the specificity of supporting agriculture; foster better rural financial environment.