Research On The Impact Of Rural Finance On The Increase Of Farmers' Income In China

Research on the Impact of Rural Finance on the Increase of Farmers'Income in ChinaRural economy plays an important role in the entire national economy in China. Because of the persistence of the basic characteristics of the dual economic structure, the rural economy is still developing slowly in China.Since the reform and opening up, there is still a wide gap of the economic development between the urban areas and the rural areas.The income gap between urban and rural areas is increasing,the income of the farmers is relatively low and decreases slowly.It is still difficult for farmers to increase income.Building a new socialist countryside and reversing the trend of expanding of the income disparity need raise farmers'income urgently.Rural financial development has made some achievements since the reform and opening up,particularly since the financial system reform.However,the rural financial development lags behind compared to the urban finance.There are some flaws and shortcomings in the development of rural fiance.Rural financial development is relatively slow and is a negative factor in the further development of rural economy and urban-rural dual structure changes in China over these years.Promoting economic development in China need deepen the rural financial system reform and improve the rural financial development.Rural finance supports and contributes to the rural economy significantly.Rural financial development becomes the core of modern economic growth in rural areas. The reform of rural financial system becomes an important component of comprehensive reforms in rural areas.It is necessarily to support and constantly perfect the development of rural finance to solve"agriculture, rural areas and farmers" problems,develop rural economy and raise farmers'income in China.Domestic and foreign scholars have conducted studies of rural financial development. Western scholars'research on the impact of the development of rural finance on the income growth of farmers is mainly shown from the research on the relationship between financial development and economic growth and the relationship between financial development and income distribution indirectly;Domestic scholars'research on the impact of the rural financial development on farmers'income growth tends to be qualitative research.However,the empirical research from the financial point of view is relatively lately-started and less.The review of related theory can be studied in two aspects-the financial development theory and the rural financial development theory.Theory of financial development includes the financial structure theory,the financial repression and financial deepening theory and the financial constraints theory;Theory of rural financial development includes the agricultural credit subsidies theory,the rural financial market theory and the theory of imperfect competitive market in rural finance.Rural finance theory is actually the specific performance and application of the financial structure theory,the financial repression and financial deepening theory and the financial constraints theory in the rural financial sector.There are some connections between them.This research chooses the aggregate production function framework of the traditional analysis and the method of empirical analysis to explore the impact of rural financial development on the farmers'income growth in China with the data from 1978 to 2008.Not only the indicator of the size of China's rural financial development is considered, but also the indicator of the efficiency of China's rural financial development is considered in the selection of indicators of the level of China's rural financial development.What's more,this paper adds the indicator of the national financial indicators on the policy level of agricultural support to fully reflect the impact of the financial support factors on farmers'income growth.The method of cointegration test is used to determine the existence of long-term equilibrium relationship between the level of China's rural financial development and the income of the farmers.Impulse response function and variance decomposition method are used to determine the interaction among different variables.Finally,this research shows relevant policy recommendations on how to promote rural finance and then increase the income of the farmers in China on the basis of the above analysis.