The Empirical Study On The Influence Of Guangdong Financial Development To Urban-Rural Income Gap

Since the reform and opening up, Guangdong has achieved rapid economic growth.But the urban-rural gap is expanding. In 2010, the ratio between actual average disposable income of urban residents and rural real income from 1.92 in 1985 expanded to 3.08 in Guangdong province. Chinese scholars have made a lot of in-depth researches on the reasons of resulting in the expansion of the urban-rural income gap. However, there are a few literatures that make a research on regional Urban-rural gap from the perspective of financial development. Therefore, it has theoretical and practical significance that i make a research on the issue of Guangdong Urban-rural gap and promote some policy recommendations to narrow the income gap from the aspects of Financial developmentFirstly, In this paper, I establish an initial analytical framework on the impact of financial development to the urban-rural income gap, proposed two channels of financial development to urban-rural income gap. Secondly, based on Status of Guangdong province, the paper makes qualitative analysis of Guangdong's financial development to urban-rural income gap from five angles. Thirdly, the paper makes empirical test of Guangdong financial development to the urban-rural income gap with the data of Guangdong, using of VAR model. Finally, the paper promotes some corresponding policy recommendations.This view is that the different allocation of financial resources between rural and urban, which affect the different growth of the economic growth and income between urban and rural, thereby affecting the urban-rural income gap; The financial resources allocation in different scale of enterprises affects the urban-rural income gap through affecting the employment of urban and rural residents; Threshold effect of financial development impact of urban-rural income gap in urban and rural residents by affecting human capital investment, direct investment, thereby affecting income rate of the urban and rural residents at present or in future. Because of lopsided distribution of financial institution between Urban and rural, lopsided allocation of financial loans between rural and urban, the tend of financial loans to large enterprises, the existence of the threshold of the capital market and difference supply of insurance markets between urban and rural, Guangdong financial development has an expansive effect on urban-rural gap.Through empirical test, I find that financial development expands urban-rural income gap. And the expanding of urban-rural income gap played a role in promoting financial developing in contrary. Moreover, through analyzing the result of impulse response function, I find the expanding of urban-rural income gap can only produce short-term effect on promoting the scale of financial development in Guangdong, which has continued to diminish, or even has adverse effects. Government's agricultural support policy on narrowing urban-rural income gap plays an important role.