The Study Of The Relationship Between Rural Financial Development And Rural Economic Growth

China is not only a large agricultural country, but also is a country with a high proportion of agricultural population. In recent years, the proportion of urban and rural incomes widening, development of township enterprises slowdown in growth, the rural economy continuing to reduce the contribution rate to the entire national economy, the "three rural" issue has been increasingly serious in front of us. Solving the resource allocation problem is a key to solve the"three rural"issue. Rural finance as the most important elements of the capital allocation system, rural economic reform will undoubtedly become a focal point. Since the reform and opening up, a great development of rural finance, promoting rural economic development played an important role. So far the rural financial reform has not kept pace with the rural economy to the growing demand for financial services. In this context, deeply studying the relationship between Chinese rural financial and rural economic growth, making rural financial development strategy, promoting coordination of rural finance and rural economic development, is of great theoretical and practical significance.In the second chapter, defining the concept of rural finance, rural finance development, and rural economic growth firstly lay a good groundwork for further analysis. There are various theories of rural economic development and rural finance, including the rural financial development theory, theory of financial deepening and rural financial mechanism to promote rural economic growth. Theory of agricultural credit subsidies, the rural financial market theory and imperfect competition of rural financial market theory are the three different schools. Theory of financial deepening represented by McKinnon and Shaw considered that financial liberalization could promote rapid economic growth. Promoting rural economic growth of rural financial mechanism presented Harold - Thomas, endogenous growth model. Finally, I made a brief literature review and summary of the rural financial development and economic growth. Research in this area abroad was represented by Burgess and Panda (2002) study in India between 1961 and 2000 on the banking sector policy changes. Domestic scholars used more advanced methods in the same period. Xu Xiaobo, Deng Yingtao (1994) used financial interrelations ratio to study the relationship between rural credit funds and income growth of farmers. Financial interrelations ratio revised by Zhang Bing(2002),he made a conclusion that the process of financial deepening in rural areas lagged about ten years than the national level. Wen Tao, Ran Guanghe, Xiong Deping made an empirical test among financial development, rural financial development and income growth of farmers in 2005.There was a cointegration between financial development and income of the farmers, no cointegration between rural financial development and income of the farmers. However, during the process of development, there are some problems, such as: lack of effective supply of rural finance, rural financial system's function imperfect. A single financial services and related policy system is flawed and needs to be improved in rural financial environment.Chapter IV presents the typical case of foreign rural financial development and rural economic growth. United States established a rural credit and insurance as the main content co-finance as the main body, policy finance for the protection, commercial finance to supplement the rural financial system. The local agricultural credit banks, regional agricultural mutual credit banks and the national agricultural bank three levels constitute France's rural credit system. The structure of the system carries out semi-official semi-public, mainly government-run, the model of cooperative and policy combined the management pattern of centralization and decentralization. Japan's rural financial system consists of non-cooperative nature of the "agricultural co-finance system" as the main, government-led "agricultural system of finance" for the protection, agricultural financial services concurrently commercial finance for the add. India's rural financial system consists of the rural policy finance, rural cooperative financial, state-owned commercial banks and private credit-based rural folk finance. During the process of economic development, the status and function of agriculture and the rural economy should be recognized, adhere to government-led, market-based, system innovation as the premise, mechanism construction as the focus, government agencies, enterprises, organizations such as the form of social network as the carrier. Broad participation of farmers, a variety of means of the integrated use of the principle of coordination, construct a policy, cooperation, commercial finance playing their respective roles, formal and informal coordination of financial regulation development model. In the empirical research component, we used rural financial development scale, structure and efficiency indicators to measure the rural financial development and used GDP per capita in rural areas to measure rural economic growth. We took empirical analysis of the relationship between rural financial development and rural economic growth from 1978 to 2009. Firstly, we took unit root test of the variables and found that each variable was first order single whole time series. Then we took cointegration test and found that the variables existed a long-term balance relationship. Secondly, we took the Granger causality test and found that rural financial development were not rural economic growth variables Granger cause, instead, rural economic growth were rural financial development structure variable Granger cause. Thirdly, based on the cointegration, we established the error correction model and found that the system of rural financial development variables would deviate from long-term equilibrium relationship between rapid responses, the system self-repair strong. Finally, by the impulse response function and variance decomposition analysis, we came to conclusion that the stability of promoting rural economic growth and financial development policies were essential.Based on the above empirical results, for the problems of rural financial development, we proposed the following policy recommendations. We took different, sustainable and stable financial fiscal policy, improved the rural financial system, innovated rural financial products and services means.